In Gimelfarb v. Cooperman, landlord, Daniel Perla, and Terrianne Cooperman, an upstairs neighbor, were sued for water damage caused to Yelena Gimelfarb's apartment.
Cooperman denied the allegation that she had intentionally allowed her bathtub to overflow, and countered that the leak was due to the building's faulty plumbing.
When Cooperman tried to provide the court with evidence supporting her position, she was prevented from doing so due to a July 2006 court order (issued in the context of a nonpayment case) which provided that any apartment-related problems in Cooperman's space had been remedied.
After the Queens County Civil Court found Cooperman couldn't introduce the leak-related evidence, and awarded Gimelfarb $1,517.25, Cooperman appealed to the Appellate Term, Second Department, which thought Cooperman's ability to present a defense had been wrongfully impeded.
The issue in the nonpayment case was whether plumbing problems in Copperman's apartment had been resolved by July 2006, while the dispute in Gimelfarb's lawsuit was whether there were any water problems in February 2006 that might have caused the leaks which impacted Gimelfarb's unit.
As a result of that error, the AT2 sent the case back for a new trial.
Clearly, Cooperman wasn't about to have her defense watered down.
Although ZOT supposedly served the pleadings by posting them at the space, Crown failed to appear on the scheduled hearing date, a default judgment was entered, and the tenant was ultimately evicted.
When Crown later sought to get back into its space, it alleged defective service of the underlying court papers. Although ZOT knew Crown's restaurant was closed -- because of a kitchen ceiling collapse -- ZOT affixed the legal papers to the premises' outer gate.
After the Kings County Civil Court denied Crown's request, the tenant appealed to the Appellate Term, Second Department.
The AT2 thought ZOT failed to make a "reasonable application" before resorting to "nail and mail," or conspicuous-place service, and that the tenant's request to vacate the underlying judgment and to be restored to possession should have been granted.
Residential Landlord-Tenant Law and Procedure--2008-2009
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New York residential landlord-tenant law is daunting to newcomers and the experienced alike, given its patchwork statutory framework, discordant case law, and emotion-laden disputes involving homes, money and the charged landlord-tenant relationship.
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In 2246 Holding Corp. v. Nolasco, 2246 Holding brought a holdover proceeding against Maria Nolasco, a 30-year tenant in its building, due to a pattern of late rent payments. While the parties agreed Maria would pay back rent and the landlord's legal fees by the next month, since the Human Resources Administration (HRA) was paying part of the tenant's arrears, a 10-day delay was contemplated to allow HRA to cut a check.
More than a month later, when Maria remitted her share of the rent, 2246 refused to accept it. Maria got several stays of a warrant of eviction's execution on the grounds HRA had failed to fork over its share. Some five months later, when the agency finally made payment, 2246 claimed the tender was untimely and asked for the eviction to proceed.
The New York County Civil Court found the tardiness attributable to HRA and excused the lapses. After 2246 appealed, the Appellate Term, First Department, reversed, finding Maria's repeated failure to adhere to the "time of the essence" requirements of the parties' agreement justified an eviction.
On appeal, the Appellate Division, First Department, ended up siding with the Civil Court and found "[t]he policies underlying the rent stabilization laws are generally better served by holding out to a tenant the opportunity usually afforded in a nonpayment proceeding to cure the breach of his rent obligations." It believed Maria shouldn't be penalized since she was a long-term "indigent tenant" who made good-faith efforts to comply with the stipulation "only to be stymied by events beyond her control."
Actually, wasn't 2246 the one stymied by that outcome?
How was forgiving compliance with the TOE's terms consistent with the parties' original intentions? Wasn't the agreement's essence lost?
In 5576 Realty, LLC v. Bourdeau, 5576 Realty filed a nonpayment proceeding against its tenant, Chantal Bourdeau. When Bourdeau failed to show up for trial, the Kings County Civil Court awarded 5576 Realty possession of her apartment and a money judgment in the amount of $4,524.02.
Bourdeau later filed an order to show cause to vacate the judgment, alleging that the amount sought by her landlord was incorrect and that she was actually entitled to a credit due to a rent overcharge.
A few days later, the parties entered into an agreement which provided the possessory judgment would remain in place, and the eviction stayed for a month, to allow Bourdeau to pay the amount owed.
Bourdeau didn't make the payment and brought another order to show cause alleging 5576 wouldn't give her a lease which was necessary for her to get financial assistance. Although the Civil Court found Bourdeau had received a lease, the judgment was stayed for another 15 days to allow Bourdeau to get financial assistance and remit payment. When Bourdeau failed to meet that deadline, she brought another order to show cause, this time claiming she needed more time to get the money. Although that request was denied by the Civil Court, the Appellate Term, Second Department, granted relief -- based on CPLR 5704(b) -- and the Department of Social Services then paid most of Bourdeau's rent. But the Civil Court ultimately denied her request to vacate the stipulation and judgment because she was unable to pay her share of the rent.
On appeal, the Appellate Term, Second Department, found Bourdeau "repeatedly failed to abide by the terms of the stipulation and did not show an ability to pay her share of the rent, she failed to demonstrate good cause to vacate the warrant."
In Azad v. Akhter, Nasima Akhter filed a nonpayment case against her tenants seeking rent arrears at a monthly rate of $1,500, together with the payment of utility charges and legal fees.
After trial, the Suffolk County District Court, dismissed the case, finding the tenants' rent (pursuant to an oral lease) was actually $1,000, that the landlord wasn't entitled to the additional charges, and all monies sought had been paid.
On appeal, the Appellate Term, Second Department, affirmed since it court could find no basis to disturb the trial court's credibility findings.
Do you believe?
To download a copy of the Appellate Term's decision, please use this link: Azad v. Akhter
In 1989, the City of New York leased out the Bush Terminal Industrial Complex to Harborside Management's predecessor, for a 10-year term ending February of 1999.
In June of 1999, four months after its lease expired, Management entered into a sublease with Mini Storage's predecessor, U.S. Movers, which rented out a building within the Complex. Although Management negotiated a renewal with the City, and sued to declare that renewal effective, Management ultimately surrendered its interest to the City, which then leased the Complex to the New York City Economic Development Corporation (NYCEDC). Mini Storage thereafter remained in possession and paid rent directly to NYCEDC.
NYCEDC later filed an eviction case against Mini Storage alleging Management was only a "month-to-month tenant" when the sublease was executed. Mini Storage argued that its sublease had been "validated" by NYCEDC's acceptance of Mini Storage's rent payments. When the Kings County Civil Court found against Mini Storage, an appeal to the Appellate Term, Second Department, followed.
Since the City never executed a renewal lease, the AT2 concluded Management was nothing more than a month-to-month tenant and, as a subtenant, Mini Storage had no greater rights than those held by Management.
NYCEDC didn't "validate" the sublease by the mere acceptance of sublease payments, particularly in view of the parties' procedural history and interaction -- such as a Civil Court nonpayment stipulation which characterized Mini as a "monthly tenant," notices sent to Mini informing Mini that payments were accepted as "use and occupancy" rather than "rent," together with the fact NYCEDC neither sought nor collected a rent increase, as provided by the "sublease."
In Friedman v. Eisner, landlords David and Rachel Friedman sued Ben Eisner based on his failure to pay seven months' rent.
While the parties' lease cited a monthly rate of $1,200, David testified he had negotiated the sum of $1,240 with Eisner's brother. And although court papers reflected that he was suing for $1,250 per month, David insisted that latter sum was a typographical error. (Interestingly, Eisner claimed he wasn't a party to any agreement reached with his brother and, inexplicably, his brother wasn't called to testify at trial.)
Despite all those inconsistencies, the Kings County Civil Court awarded the Friedmans seven months' rent at the rate of $1,240 per month.
On appeal, the Appellate Term, Second Department, modified the outcome. While it agreed the Friedmans had sufficiently established that seven months' rent was due, and the typographical error was "de minimis," the Friedmans were unable to prove the existence of an agreement which bound the tenant to a higher rate. As a result, the amount owed for the period was reduced to $1,200 per month (less $400 for conditions which justified a rent reduction).
Oh, brothers!
To download a copy of the Appellate Term's decision, please use this link: Friedman v. Eisner
When the New York County Civil Court granted relief in the landlord's favor, and awarded a final judgment of possession and a money judgment in the amount of $28,853, the tenant appealed to the Appellate Term, First Department.
Since the tenant was unable to offer an acceptable excuse for his failure to pay the rent, and the lease provided the space was to be used for commercial purposes only, the AT1 noted "to the extent that any portion thereof was unlawfully used for living purposes, it afforded no basis for relief to [the tenants] in this proceeding."
In Corbo v. West Side Travel, Paschal Corbo sued West Side Travel for nonpayment of rent and alleged he orally demanded the money from his tenant.
When West Side later failed to file an answer or appear in court in response to Corbo's nonpayment case, a final judgment was entered against the company and it was subsequently evicted.
Soon thereafter, West Side sought to be restored to the space alleging that it had been misnamed in Corbo's papers -- its actual name was West "Street" Travel. The tenant also claimed it owed no money to Corbo and never received any payment requests from him.
When the Richmond County Civil Court denied the tenant's motion, the company appealed to the Appellate Term, Second Department, which found the misidentification "de minimis" and to have caused no confusion "as to the party being sued."
The AT2 also found that Corbo wasn't required to give the tenant notice in writing since the oral demand was a legally permissible alternative. The appellate court also noted any payments the tenant made to the landlord were properly applied to the rent arrears and the tenant failed to pay the balance of monies due.
Finally, restoring the company to its space wouldn't have been appropriate, since it was a "month-to-month" tenant, whose occupancy was terminable at any time by either party, and Corbo had already "served a termination notice on tenant."
Audrey D faced eviction from her apartment for nonpayment of rent and was apparently unable to find alternate housing due to health and financial challenges.
During a hearing to determine whether she needed a guardian, Audrey D requested that her father be appointed, but he acknowledged that he didn’t know how to find adequate housing for his daughter given her limited resources. A representative of the Selfhelp Community Services, Inc. (SCSI), on the other hand, contended that it could assist Audrey D.
After it was determined that Audrey D was an incapacitated person, the Kings County Supreme Court appointed SCSI to oversee her personal needs and property management.
On appeal, the Appellate Division, Second Department, explained that when selecting a guardian for an incapacitated person, the primary concern is what is in the incapacitated person’s best interests.
When an incapacitated person nominates a guardian, the court will usually defer to the incapacitated person’s request unless there is a clear showing that such an appointment would be inappropriate.
While a family member’s appointment is preferable, it is within the court’s discretion to select an outsider if the family member is unsuitable. Given a guardianship’s unique responsibilities, the AD2 concluded that appointment of Audrey D’s father would not have been appropriate or in her best interests.
In World Monuments Fund, Inc. v. Ninety-Five Madison Co., Ninety-Five Madison Co. (“NFM”) entered into a lease which provided that "possession of the premises should be given to [World Monuments] upon lease signing, but no later than May 1, 2000, and that rent should commence three months after lease signing, but no later than August 1, 2000.”
Of course, the lease was not signed, nor was possession given to World Monuments, by May 1, 2000.
When NFM sought to recover the rent arrears, the New York County Supreme Court sided with World Monuments and concluded that the tenant was entitled to a three-month credit.
On appeal, the AD1 examined the lease and agreed, noting that NFM had neither billed nor sued World Monuments for the months at issue; inaction which further supported the lower court’s finding that World Monuments was entitled to the concession.
In Adelphi Assoc., LLC v. Gardner, since Gardner was incapable of defending himself within the context of a nonpayment case, a guardian ad litem (GAL) was appointed to represent the tenant's interests.
Without ever meeting or consulting with the tenant, the GAL agreed to convert the nonpayment to a holdover proceeding, and consented to the tenant’s eviction.
When the tenant later secured counsel and asked the Kings County Civil Court to vacate the agreement and be restored possession, that forum denied the request.
On appeal, the Appellate Term, Second Department, sided with the tenant and vacated the agreement since it had been “inadvisedly entered into.”
But the restoration request was denied with leave to renew, as the apartment's current occupant had not been joined to the case. Should that occur, the AT2 suggested the use of a “balancing test” to determine who would get to keep the unit -- after weighing such factors as the former tenant's ability to pay his debts and future rent, together with the prejudice or injury the existing occupant would suffer.
Wouldn't want to be the judge that has to make that decision.
In 115 E. 9th St. Retail v. STA Travel, Inc., 115 E. 9th St. Retail filed a nonpayment case against its tenant, STA Travel, Inc. (STAT). At issue was STAT’s failure to pay its real-estate tax escalation and water and sewer charges.
After the New York County Civil Court awarded the landlord $37,545.84 in rent arrears, STAT appealed to the Appellate Term, First Department.
The AT1 found that STAT could not challenge the landlord’s real-estate tax escalation, as the tenant had “failed to object to landlord's annual real estate tax escalation statements within 45 days of their issuance” as required by the parties’ lease agreement.
As for the payment of the water and sewer charges, STAT did not contest their “reasonableness” or claim they were "inflated." Rather, the tenant argued that since the landlord had not received bills from the City for the water and sewer charges STAT was not required to remit payment. Without a lease provision which supported the tenant’s position, the AT1 was of the opinion that the objection lacked a meritorious basis.
Because New York is such a "great mosaic," you can expect to encounter people from all walks of life with varying degrees of proficiency with the "mother tongue."
Each and every day, attorneys are in litigation with tenants who lack fluency in English. If a summary proceeding, like a nonpayment or holdover proceeding, is started against such a tenant, must the pleadings be translated as an accommodation to the recipient (in order to avoid challenges to the service effort or to the proceeding's maintenance)?
According to a Judge of the New York County Civil Court, that question can be answered with a resounding no.
In 240 West 37 LLC v. Star NY Fashion, Inc., the commercial tenant allegedly violated the lease's insurance coverage requirements. In an interesting fall-back position, the tenant's counsel challenged the court's jurisdiction on the grounds that the individual who had received the notice of petition and petition (on behalf of the corporate tenant) was not fluent in English and "did not know what was handed to her."
Here's how the Judge disposed of that argument:
Certain types of notices, and pleadings in consumer collection cases require pleadings to be in English and Spanish [N.Y.C.C.A. § 401 [d]. The Respondent does not cite any law or rule that has the same requirement for Chinese, whether in a plenary or summary proceeding. I have found no such law or rule. As noted in a case from Illinois, discussing the matter of NUEZ V. DIAZ, 101 Misc2d 399, 421 NYS2d 770, "There is a relative dearth of published opinions defining the contours of "suitable discretion," but it is clear that the amount of discretion necessary to satisfy the rule is rather low." [FLOWERS v. KLATICK, Not Reported in F.Supp.2d, 2004 WL 2005814 (N.D.Ill.)] The Respondent has elected to do business in the City of New York, where English is the predominate language. The petition was signed on October 9, 2007, the answer is dated October 18, evincing an almost spontaneous response. Under such circumstances, the Respondent cannot be said to have prejudiced.
As to the dispute's merits, since the court was of the opinion that the tenant had failed to secure the required amount of liability coverage (only $1Mill rather $2Mill was provided to the landlord), and no timely cure of that default was effected, summary judgment was awarded in the owner's favor.
Of course, the decision suggests that the outcome "might" have been different had the tenant failed to respond to the pleadings. Interesting, no?
(By the way, the tenant should expect the Notice of Eviction to be in English.)
Since nonpayments and holdover cases are designed to be resolved expeditiously, it's never a good thing to allow these disputes to languish.
While they can be held in abeyance for a whole host of reasons, once a matter is "marked off," and no longer on the court's calendar, getting it back before a judge can prove to be quite a challenge -- especially when an adversary is resistant and too much time has elapsed.
In Grossman v. Homenny, the owners sought to resurrect a holdover proceeding some 22 months after the case had been “marked off.” Not only did the New York County Civil Court deny that request, but it granted the tenants' cross-motion to dismiss the entire case.
On appeal, the Appellate Term, First Department, agreed with that outcome, citing the landlords' failure "to demonstrate a meritorious claim, a reasonable excuse for the delay, a lack of intent to abandon the proceeding and an absence of prejudice to the elderly tenants.”
Is this a testament to the Homennys' hegemony?
To view a copy of the Appellate Term’s decision, please use this link: Grossman v. Homenny
TENANT PAYS RENT TO ATTORNEY AND ALMOST GETS EVICTED
In Clarkstown Housing Associates v. Henderson, Clarkstown Housing commenced a nonpayment proceeding against its tenant, April Henderson. The parties eventually reached an agreement and entered into a stipulation, which stayed the execution of a warrant of eviction so that April could pay the monies due.
When Clarkstown Housing did not receive payment, a warrant of eviction was issued based on an attorney’s affirmation which contended that the terms of the stipulation had been breached. In an unusual turn of events, April’s attorney moved to vacate the warrant, claiming “that [April] had timely paid a portion of the funds into his office’s escrow account, but, through his own omission, these funds had not been transferred to [Clarkstown Housing].”
When the Rockland County Justice Court denied her request, April appealed to the Appellate Term, Second Department.
In the AT2’s view, the evidence demonstrated that April had all the required funds available and that her attorney had an excuse for failing to transmit the monies to the landlord. As a result, the appellate court was of the opinion that the "inadvertent default" was excusable and should not result in the tenant's eviction.
In BNS Buildings, LLC v. Morgan, Gary Morgan, who had resided in a rent-stabilized apartment for some 28 years, settled a nonpayment case by consenting to a money judgment in the amount of $504 together with a judgment of possession in the event the monies weren’t paid by a date certain.
The agreement required BNS to make certain repairs to the apartment, but a dispute arose regarding those repairs, and a series of court appearances ensued. During that period of time, BNS declined payments made by the Department of Social Services (DSS) on the tenant’s behalf, claiming that the rent then due exceeded what was being tendered.
The Kings County Civil Court determined that DSS and Morgan should each “pay a portion of the rent then agreed by the parties to be due, and that the warrant was again to be stayed pending such payment.” When BNS appealed, the Appellate Term, Second Department, was equally sympathetic to Morgan’s predicament.
Since Morgan was possibly entitled to an abatement because of violations and other conditions extant, was prepared to pay the amount the court found to be due, and, BNS had refused to accept a check from DSS for the $504, the AT2 found that the lower court properly exercised its discretion staying the execution of the warrant of eviction since the law abhors the forfeiture of “long-standing” regulated tenancies.
A lone dissenter concluded that Morgan had failed to substantially comply with the stipulated terms of the parties' settlement and had allowed the case to "deteriorate into a pattern of repeated requests for relief" wherein Morgan violated a number of court orders.
By the time DSS stepped into the picture with the $504, additional rent payments had become due and were required to be made. As a result of Morgan's inability or refusal to honor his contractual obligations, the dissenter was of the opinion that “good cause” had not been shown for any additional delay and that by failing to stem this kind of abuse “the majority effectively dissuades landlords from ever entering into a stipulation with a tenant.”
Many landlord-tenant cases never get to the trial stage and are frequently resolved by way of an agreement known as a "stipulation of settlement" or "stip."
Like other contracts, these documents can be the subject of protracted litigation, particularly when errors, omissions, interpretative disputes or other misunderstandings arise.
So, while one party may think it's getting a form of closure by signing the document, the other may later feel that the agreement should be rescinded, or not enforced as written, and may ask a judge to restore the litigants to the status quo ante -- the way things were before the stip was signed.
While often an effective plot device for works of fiction, judges will typically resist use of this "way-back machine" power, unless extenuating circumstances -- like fraud, collusion or mistake -- are present.
If the existence of one or more of those factors can not be demonstrated to a court's satisfaction, the agreement's silence about a right or remedy will likely be perceived as a knowing and intentional relinquishment or "waiver" and a litigant will not be afforded an opportunity to rewrite the deal.
By way of example, in Rosewohl Enters., LLC v Gluck, Rosewohl settled a nonpayment case it had brought against its tenant, Jack Gluck, by way of a stipulation of settlement that was "so ordered" by a judge.
When Rosewohl later sought to collect the fees it incurred for having to commence the case, both the New York County Civil Court and the Appellate Term, First Department, rebuffed that effort, finding that the stipulation's silence precluded the recoupment of those charges.
As we have previously reported, there continues to be a disturbing resistance by our appellate courts to award legal fees to a prevailing party, even when that reimbursement is clearly authorized by the parties' lease agreement.*
Although we have already expressed our concerns about this phenomenon, we couldn't resist writing about it again, particularly after we came across the Appellate Term's decision in East Midtown Plaza Hous. Co. v. Cannings.
In that nonpayment case, after a cooperative was awarded some $4,419.00 in maintenance and additional-rent charges, it also sought to recover some $8,100 in legal fees it had incurred during the litigation's course. While the New York County Civil Court granted the landlord's request for fees, the Appellate Term, First Department, characterized the recovery as "manifestly unfair" and reversed.
In this particular case, deficiencies with the building's multiple-dwelling registration (or "MDR") triggered "substantial delay and expense," and prevented the cooperative from quickly pressing its claim to completion. That, according to the AT1, militated against the grant of fees in the landlord's favor.
A lone dissenter, Justice William P. McCooe was quite troubled by the request and a bit more vehement in his disapproval of the cooperative's conduct:
The landlord transformed what should have been a garden variety summary non-payment proceeding into one requiring motions and a cross motion because of its misstatements as to the status of the building in the petition and the motion papers which misled the motion court to render an erroneous decision and waste judicial resources. A dismissal of the proceeding at that point for failure to file a multiple dwelling registration statement would have resulted in the tenant being the prevailing party ... The claim for attorneys fees is already twice the award and in large measure was caused by the landlord's conduct. The landlord should not be rewarded for its mistakes nor should the tenant be required to pay for them ....
While we understand that the fees associated with correcting the building's MDR status should not have been chargeable to the tenant, it remains unclear why the balance of the costs incurred by the landlord was denied -- and why not even a pro-rated portion of the owner's costs was awardable in this instance.
Since the cooperative successfully recouped a money judgment against the tenant, we are of the opinion that a blanket denial of all fees and charges was far from a fair, equitable, or just result.
For over three decades, Sonia Rosario has lived in a New York City rent-stabilized apartment and, for a good chunk of that time, has received benefits from the Tenant Based Assistance: Housing Choice Voucher Program, commonly known as “Section 8.”
In February 2003, Rosario’s landlord, Diagonal Realty, LLC, informed her that it would no longer accept Section 8 payments. When Rosario did not tender the full rent herself, Diagonal commenced a non-payment proceeding in the New York County Civil Court.
New York’s Rent Stabilization Code is a regulatory scheme that affords tenants an array of protections. One such protection is that landlords are required to provide renewal leases to these tenants "on the same terms and conditions as the expired lease, except where the owner can demonstrate that the change is necessary in order to comply with a specific requirement of law ....”
The state’s highest court concluded that the acceptance of payments made by the Section 8 Program is a “term and condition” of the parties' lease. Thus, a landlord who has accepted Section 8 payments on behalf of a rent-stabilized tenant may not later refuse to do so.
Diagonal argued that it was not required to continue accepting Section 8 payments due to a change in federal regulations allowing landlords to terminate participation in the program “without cause” upon the expiration of the lease. This new regulation, Diagonal contended, preempted the state’s Rent Stabilization Code.
The Court of Appeals rejected that interpretation and was of the opinion that Congress intended to allow state protections to remain in place when federal protections for Section 8 tenants were repealed.
Thus, while “free-market” Section 8 tenancies may end upon the expiration of a lease term, rent-regulated Section 8 participants remain "untouchable."
In Matter of Kern v. Guller, Morris Guller had filed an eviction proceeding against his tenant, Henry Kern, and was awarded a judgment of possession and a warrant of eviction but judgment on the amount of unpaid rent was reserved so that Kern could provide the court with proof of payment.
On appeal to the County Court of Greene County, Kern secured a stay of execution of the warrant of eviction. However, because he failed to submit proof of payment, the Justice Court issued a judgment awarding Guller $4,800 in unpaid rent. The County Court affirmed that judgment and reinstated the warrant of eviction.
On appeal, the Appellate Division, Third Department, again affirmed.
Interestingly, even though Guller’s pleadings proffered inconsistent theories -- alleging both the nonpayment of rent and holding over after the expiration of the tenancy's term -- the AD3 concluded that the Justice Court retained jurisdiction to entertain the case and properly granted relief in Guller’s favor.
To win a holdover case, a landlord must establish that a tenant remains in possession of space after the tenancy’s termination (without the owner's consent). In this instance, the court found that Kern’s month-to-month tenancy was properly terminated by Guller’s oral and written notices.
While the AD3 was of the opinion that inconsistent causes of action may be alternatively pled in a summary proceeding, that holding is at odds with a number of cases which have expressed disapproval of the practice.*
* See, e.g., Dean v. Korkidis, N.Y.L.J., 12/5/91, p. 29, col. 3 (App. Term, 9th and 10th Jud. Dists.) ("This court disapproves of the practice of combining two such inconsistent theories in one proceeding. Since a nonpayment proceeding commenced after a Notice of Termination can vitiate said notice, this court is unable to discern with sufficient clarity, what the underlying nature of this proceeding is meant to be. Such 'hybrid' pleadings are not to be encouraged or otherwise endorsed as valid pleadings."); Harte v. Cornacchia, N.Y.L.J., 10/4/91, p. 25, col. 6 (App.Term, 9th and 10th Jud.Dists.) ("The landlord commenced a combined holdover and a nonpayment proceeding against tenant. Under the circumstances, the landlord's commencement of the nonpayment proceeding was inconsistent with the landlord's claim that the tenant was holding over.")
You're certain to like it, particularly if you despise attorneys.
In that case, the tenant retained counsel to vacate a judgment of possession and warrant of eviction that had issued against her on default. Although the tenant had a breach of warranty of habitability defense (as a result of certain violations) and alleged that she had not been served with either the demand of the rent or any of the pleadings in the case, the tenant's attorney settled the dispute by stipulating that the tenant would pay some $10,148.60 in about 40 days, together with such prospective rent that would become due and payable.
When the tenant later learned what happened, she retained another attorney and alleged that her prior counsel had entered into the agreement "without her knowledge and consent." She also objected to a $4,000 error in the amount of rent claimed to be due and to the lack of any repair obligations on the landlord's behalf.
After the Kings County Civil Court refused to set aside that agreement, the Appellate Term, 2nd and 11th Judicial Districts, intervened and reversed. The appellate court noted that while an attorney may usually make "procedural or tactical decisions" on a client's behalf, counsel is not permitted to "compromise or settle a claim" without the client's approval. Absent that authority, any agreement reached may not be binding.
When entering into a settlement, how does a third-party know that the adversary's attorney may rightfully take such action? Without the litigant's active participation in the process, you really don't. And, according to the AT's decision, it isn't prudent to blindly accept an adversary's representation that they are acting with authority. In fact, you do so at your own peril.
In this instance, the AT was of the opinion that the tenant was denied an opportunity to consult with her attorney before the stipulation was reached, that she only learned of the disposition of her case after the agreement had been signed in her absence, and, that she never ratified the agreement by "words or conduct." As a result, the settlement was annulled and the case remanded for a decision on the tenant's motion to vacate her default.
A bittersweet outcome for the landlord, that's for sure.
If a recipient contests receipt of legal papers alleged to have served on them, you better be prepared to present testimony as to your efforts to effect service, or your case will be dismissed.
In Forty Central Park South v. Kiss, the tenant denied receipt of the pleadings in a summary proceeding. After the court held a "traverse" -- a hearing to determine whether or not the recipient was properly served with the papers in question -- a Housing Court Judge of the New York County Civil Court dismissed the case.
Apparently, the judge believed the tenant's testimony that she had not received copies of the Notice of Petition and Petition by mail. And, for some undisclosed reason, the landlord's attorney failed to produce a witness -- or other evidence, like mailing receipts -- which would have established that the papers had been mailed to the tenant as statutorily required.
Faced with that record, the Appellate Term, First Department, affirmed the dismissal on appeal.
We're sure there were no smooches for the landlord's attorney after that outcome. But was it the kiss of death?
Settlement agreements -- or "stipulations" -- reached within the context of litigation are typically viewed as preferred dispute resolution mechanisms, and will not be cast aside absent some significant misunderstanding or irregularity.
If you think you've got at an agreement with someone, it's best to get that understanding documented in a final written form as soon as possible, and not leave any important elements or aspects of the arrangement "open" or unresolved, since problems are likely to ensue.
By way of example, in Split Rock Developers, LLC v. Zartab, Inc., a tenant ended its subtenant's lease based on the occupant's failure to pay rent for the months of October, November and December 2004. Although the parties had entered into a "so-ordered preliminary stipulation" which provided that the subtenant would vacate the space and pay $5,800 upon execution of a more formalized agreement, when the time came to execute that formal document, the subtenant refused to do so.
When tenant moved the Nassau County District Court to compel the subtenant to perform as originally represented, the District Court vacated the underlying settlement agreement based on "mutual mistake" and directed the parties to proceed to trial on the underlying dispute. On appeal, the Appellate Term, 9th and 10th Judicial Districts, modified the outcome by reinstating the "preliminary agreement" and suggested that the parties could duke out the agreement's enforcement in another forum (like the local Supreme Court).
In its decision, the AT noted as follows:
In our view, the relief sought of compelling tenant to execute the more formal stipulation and the releases is equitable and injunctive in nature, and thus beyond the jurisdiction of the District Court to grant ... Therefore, we sustain the court's denial of landlord's motion to enforce the stipulation on the ground that the court lacked the jurisdiction to grant the relief sought. In so holding, we do not pass on the ultimate issue of whether the so-ordered stipulation is enforceable. We note, however, that, generally, when a contract does not specify a time of performance, a reasonable time is implied ....
That last sentence piqued our curiosity.
If the appellate court had been disinterested in passing upon the agreement's enforceability, then why did it offer a comment on a party's "reasonable time" performance requirement?
And, if the agreement was unenforceable, why would the appellate court bother reinstating it?
(Not to split rock hairs, but this wouldn't be another instance of our courts elevating forum over substance?)
NO BIG WHOOP IF AFFIDAVITS OF SERVICE AREN'T TIMELY FILED?
In Riverside Syndicate, Inc. v Saltzman, the Appellate Term, First Department, examined the consequences of a landlord's failure to timely file affidavits of service for a number of summary holdover proceedings initiated in the New York County Civil Court.
On motion by the tenants, the Civil Court dismissed the landlord's cases because of a single-day delay in getting the papers to the court.
A state law [New York Real Property Actions and Proceedings Law section 735(2)] expressly provides that proof of service of pleadings in a summary proceeding "shall be filed with the court or clerk thereof within three days after" personal delivery to the tenant or after completion of all mailings when service has been otherwise effected. However, the statute is conspicuously silent as to the consequences of a landlord's failure to timely file these papers.
Another state law [CPLR 2004] provides that "the time fixed by any statute, rule or order" may be extended upon a showing of "good cause," which can include an attorney's inadvertent error or "law office failure."
Despite that clear and unambiguous language, the Appellate Term, First Department, reversed the dismissals in the "absence of any discernible prejudice to the tenants." (What happened to the demonstration of "good cause" by the "defaulting" party? Why do the tenants have to show "prejudice," when it is the landlord who has failed to adhere with the requirements of statute?)
Diamonds are reported to be the hardest minerals known to humankind. On the "Mohs' scale of mineral hardness," here's how diamonds rate (with a 10 being the highest rank on the scale):
Talc
Gypsum
Calcite
Fluorite
Apatite
Orthoclase Feldspar
Quartz
Topaz
Corundum
Diamond
In West 45th Partners, LLC v. Moneta Diamonds, Inc., Moneta Diamonds met considerable resistance when it attempted to vacate a stipulation of settlement or to excuse its nonperformance of the terms of the parties' agreement. (Like any contract, these documents are usually enforced in accordance with their terms, particularly in the absence of any vagueness, ambiguity, or other significant irregularity.)
In this instance, Moneta Diamonds reportedly failed to honor certain "time of the essence" payment provisions. Since the tenant had been represented by counsel when it acquiesced to these "unambiguous" terms, the Appellate Term, First Department, viewed the agreement as rock solid and was concrete in its resolve that, absent a good explanation for the default, an eviction could ensue.
Undeniably, this particular settlement agreement didn't prove to be Moneta Diamonds's best friend.
When a Manhattan fencing center failed to pay its rent, the building's landlord filed a summary nonpayment proceeding to collect the sums due.
In its defense, the center counter-attacked with the argument that the landlord had violated the law by leasing the space to the tenant without a certificate of occupancy (or c/o).*
Both the New York County Civil Court, and the Appellate Term, First Department, did not respond favorably to this parry. Since this commercial tenant had agreed to accept the premises in "as is" condition, and there were no representations or warranties made by the owner that it would secure a c/o for the tenant (or otherwise legalize the space for the tenant's use), the landlord was awarded a money judgment for a whopping $237,965.39 in rent.
*A c/o is a document issued by local government agency which certifies that the structure complies with local codes and ordinances and that the building may be utilized for the designated purpose(s).
Even when things look pretty bleak for a tenant, and an eviction is imminent, a court retains the power to vacate the warrant and can allow the tenant to remain in possession of commercial or residential space for "good cause shown." [RPAPL section 749(3)]
In Mack-Cali So. W. Realty Assoc., LLC v. Benni's I, LLC, the tenant, Benni's I, LLC (doing business as "Bennigan's"), conceded that it owed its landlord $126,224.59 in rent for the period February 14, 2003 through July 6, 2005, and signed a stipulation of settlement outlining the payment terms. Months later, as a result of Benni's failure to comply with the agreement's terms, the City Court of Yonkers (Westchester County) awarded the landlord a money judgment for all unpaid rent in the amount of $183,719.77, granted a final judgment of possession and issued a warrant of eviction as against the tenant. Benni's later moved by Order to Show Cause to stay the eviction and vacate the court's determination alleging that the judgment incorrectly included "disputed taxes." Upon signing of the stay request, the court directed the tenant to deposit $60,000 into court. After a subsequently scheduled hearing, the court denied the tenant's motion, ordered the release of the $60,000 to the landlord, and stayed the eviction for an additional 14 days.
Within that two week period, tenant remitted the balance of the judgment amount ($123,969.77) and again asked the court to vacate the final judgment of possession and warrant of eviction based upon the tenant's full and complete payment of all sums which had been found to be due. Although the landlord objected to the request, the court granted relief in the tenant's favor, finding "good cause" to reinstate the tenancy.
On appeal, the Appellate Term, 9th and 10th Judicial Districts, concurred with the District Court, noting as follows:
In our view, the court could properly determine that good cause existed to vacate the warrant (RPAPL 749 (3)). "The law abhors a forfeiture of a lease ...." Here, the court found that tenant had paid the judgment in full. In addition, tenant has allegedly paid more than $2.5 million in rent over the four years of its tenancy, employs more than thirty people, who would be harmed by execution of the warrant, and stands to lose a long-term lease and its investment in the premises. Although full payment of a judgment is not grounds to vacate the judgment, in these circumstances it was not an abuse of discretion for the court to vacate the nonpayment warrant in order to prevent a forfeiture of the leasehold ....
So, for now, it looks like we can still all get together at Bennigan's.
In 15th Assoc. LLC v. Pamblanco, the landlord -- 15th Associates, LLC -- won a summary holdover proceeding that it had filed against its tenant.
While an appeal of the case was pending, the tenant died. Rather than issue a substantive decision on the merits, the Appellate Term, First Department, opted to dismiss the appeal without prejudice. The court cited a "lack of jurisdiction" to entertain the matter upon the death of a party. Here's what the AT1 wrote:
The death of a party divests the court of jurisdiction and stays the proceedings until a proper substitution has been made pursuant to CPLR 1015(a). In the absence of a substitution of a representative for the estate of the (now) deceased tenant-appellant, this court is without jurisdiction to hear and decide the appeal ....
We don't understand why the court felt compelled to use the words "lack of jurisdiction" and why it opted to dismiss the appeal. Here's what CPLR 1015(a) provides:
Substitution upon death. (a) Generally. If a party dies and the claim for or against him is not thereby extinguished the court shall order substitution of the proper parties.
Where in that statutory language does it say the court is divested of "jurisdiction" upon a litigant's death? And, why did the court refuse to stay the appeal so as to allow for an appropriate substitution (by an estate representative)?
There are a series of steps a landlord must take before starting a rent nonpayment case.
The first hurdle is to make a demand of the rent upon the tenant.
While this demand may be made "in person" (orally) or "in writing," even this relatively simple predicate is governed by a number of procedural and technical requirements. Among other things, this demand must clearly inform the tenant of the approximate good-faith sum sought to be recovered and the encompassed time frame.
For example, requests for "all back rent" -- without further elaboration or delineation -- are insufficient to support a case.
Similarly, "lumping" -- offering a total dollar amount, without providing a breakdown or other substantiation for the calculation -- is also discouraged.
Of course, by making this demand, a landlord is acknowledging the ongoing nature of the landlord-tenant relationship and is seeking to recover such sums due pursuant to the parties' lease for the commercial or residential space.
The last thing a landlord wants to do is to muck up the case with inconsistent theories for recovering possession. For example, in Bank of New York. v. Kaplan, the landlord's pleadings alleged, on the one hand, a claim for the unpaid rent (pursuant to a renewal), yet alternatively asserted that the lease agreement had expired (and the tenancy terminated). This is how the court framed the issue:
[T]the petition demands rent based on Petitioners's [sic] deeming the lease renewed by using their appraisal report. See Petition ¶¶23 & 24. However, alternatively, Petitioners seek possession upon termination of the lease based on Respondent's failure to properly renew the lease. See Petition ¶31. Respondent, therefore, seeks dismissal on the basis of inconsistent theories.
A petition cannot be based on alternative inconsistent theories .... The petition seeks rent which by that legal term acknowledges there is a tenancy pursuant to an agreement. Therefore, the payment of the demanded rent satisfies the petition and the tenancy continues. However, the petition seeking possession by that legal term there is no relationship and therefore the occupancy terminates upon a judgment of possession. Consequently, this petition which seeks both rents and termination is inconsistent and defective. Therefore, the motion for summary judgment is granted.
Sometimes, my friends, it's best to keep things simple.
The landlord should have opted for either a nonpayment or a holdover proceeding. (And, in the event neither neatly fit into the landlord's theory of recovery, an action for declaratory judgment -- filed with the county Supreme Court -- would have likely been the ideal way to go.)
Hedging bets may work for gamblers, but in New York's landlord-tenant court, that kind of strategy could get your case booted.
North Main St. Bagels (NMSB), located out in Easthampton, New York, closed its doors back in October 1997, but didn't surrender its space since it was in the midst of negotiating a sale of the business.
Even though it was no longer actively operating, NMSB left its equipment in its space, maintained electrical service, and continued to pay its rent. Landlords Robert and Shirley Duncan -- dissatisfied with the status quo -- entered the premises, "illegally" evicted the tenant, and relet the space to another.
Although the landlords had been found guilty of a trespass and wrongful eviction, the Suffolk County Supreme Court awarded the tenant nominal damages — a single, solitary dollar — for the inconvenience and damage suffered.
On appeal, the Appellate Division, Second Department, disagreed with the outcome and awarded the tenant $30,000, together with prejudgment interest from the date of the wrongful eviction.
The appellate court explained that in this kind of case, “[t]he measure of compensatory damages for wrongful eviction is the value of the unexpired term of the lease over and above the rent the lessee must pay under its terms together with any actual damages flowing directly from the wrongful eviction including lost profits and a loss of personal property.” Since the "replacement lease" was at the same rent which NMSB had paid to its landlords, no compensatory damages were owed for the value of the unexpired term. However, the court found that the tenant was entitled to compensation for the loss of its personalty.
NMSB introduced testimony that its equipment was valued at approximately $30,000, after depreciation. Since that testimony went unrebutted at trial, the appellate court concluded that $30,000 more appropriately compensated for the loss.
In Forty Central Park South v. Wadud -- a nonpayment case -- the New York City Civil Court refused to vacate a warrant of eviction or to relieve a tenant of the consequences of his non-compliance with a “so ordered” stipulation of settlement. On appeal, Appellate Term, First Department, affirmed.
When parties to a summary proceeding wish to amicably resolve all or some of the issues in a dispute, they enter into an agreement known as a stipulation. The majority of these documents are handwritten on forms available in most courtrooms and are “so ordered” by the presiding judge or judicial hearing officer. In nonpayment cases, these agreements will minimally contain a breakdown of the rent due, list a payment schedule, provide a timetable for any repair obligations, and, will reserve remedies (such as the tenant's eviction) in the event of a party’s breach or default.
Viewed as efficient dispute resolution mechanisms, these agreements are stringently enforced (in the absence of some substantial irregularity). Fraud, collusion, or mistake are commonly cited as reasons for annulling the arrangement, but the party seeking to be relieved of the contract's terms has the burden of establishing the existence of one or more of these grounds.
As Wadud reinforces, courts will typically avoid recrafting an agreement’s terms “based upon the principle that the parties to a civil dispute are free to chart their own litigation course.”
While precision and exactitude should be the goal in landlord-tenant proceedings, the reality is that mistakes happen. (In fact, if you really think about, the latter tend to abound.)
More often than not, judges will forgive inconsequential errors or omissions made by litigants or their counsel and will usually allow court papers to be amended to correct errors or deficiencies. Many correctly believe there is little point to elevating form over substance, particularly if a case can be started anew days or weeks later.*
Yet, if certain members of the New York State Assembly have their way, the flexibility courts have to allow amendments may be constrained considerably, particularly when it comes to nonpayment cases. (But first, allow us to give you a little context.)
Under existing caselaw, a demand of the rent need only cite an "approximate good faith sum.” Exactitude is usually not required.**
However, a proposed bill (A5120) would bring any malleability to an end. Here's what the law would provide:
FALSE NON-PAYMENT OF RENT CLAIMS. IF THE COURT FINDS THAT THE AMOUNT REQUESTED BY THE PETITIONER IS GREATER THAN THE AMOUNT DUE, IN ACCORDANCE WITH A PREVIOUS AGREEMENT BETWEEN THE PETITIONER AND THE RESPONDENT CONCERNING RENT PAYMENTS, THE COURT SHALL FINE THE PETITIONER ONE HUNDRED DOLLARS AND DISMISS THE PROCEEDINGS.
We believe that the language of this law is completely unworkable and will foster needless expense and delay that would be harmful to both landlords and tenants.
What is a “false" nonpayment claim? (Beats us! The term is not defined.)
Will the law encompass only “intentional” misrepresentations as to the sums sought to be recovered? (It does not currently provide that carve-out.)
And, pray tell, how does one go about proving a landlord intentionally sought to collect monies it knowingly believed it wasn’t entitled to? (We think it is highly unlikely that landlords will ever concede, in open court or in a sworn affidavit, that cases were brought to collect sums that they did not think were due or payable.)
What of miscalculations or innocent errors? If a litigant’s rent demand is off by a nickel, does that trigger the statute's penalties and “poison” an entire case?
And, what of any balance rightfully due to the landlord? Should a monetary penalty be imposed and an entire case dismissed, simply because a landlord sought a nickel more than what s/he was ultimately entitled to collect?
Obviously, A5120 is an unworkable piece of legislation. We are hopeful that rational minds will prevail and that the bill never sees the light of day.
* Without some demonstrable prejudice, we do not see how public policy or judicial economy is furthered by denying litigants the opportunity to have disputes heard on the merits. Cases should not “won” or “lost” on the basis of some typo or other ministerial error.
** See, e.g., Kerman Equities v. Swett, N.Y.L.J., 2/7/96, p. 29, col. 1 (App.Term, 2nd and 11th Judicial Districts) ("A three-day notice demanding payment of rent must inform the tenant of the particular period for which rent is due and the approximate sum of rent owed for that period ....").
TENANT DENIED PURCHASE OPTION DUE TO LEASE DEFAULT
Failing to pay the rent on time could have dire consequences for commercial tenants even when they have never been declared in default.
According to the Appellate Division, Second Department, in Cyber Land, Inc. v. Chon Prop. Corp., a tenant's mere failure to pay rent on time could work to divest it of lease-related rights, such as a "right of first refusal" to purchase a building. In that case, the option was conditioned upon tenant "not being in default" during the lease term and, of course, this particular occupant "frequently" paid its rent late and failed to remit the full amount due to its landlord.
When the building was later sold to a third party, the tenant filed a lawsuit in the Queens County Supreme Court seeking to enforce its right to purchase the building. The tenant claimed that its mere failure to pay the rent on time did not invalidate the option, since it was never given a formal default notice. The tenant further asserted that any alleged violations of the agreement's terms were inconsequential.
Neither the Supreme Court nor the Appellate Division concurred with the tenant's arguments. Here's how the Appellate Division addressed the tenant's claims:
"A covenant to pay rent at a specified time ... is an essential part of the bargain as it represents the consideration to be received for permitting the tenant to remain in possession of the property of the landlord" ... Accordingly, the plaintiff's repeated breaches of the covenant to timely pay rent contained in the lease were not de minimus, but were instead breaches "of a material term of the lease" ... Notice of such default was not required ... Furthermore, while the plaintiff is correct that equity may relieve a party against a good faith, de minimus, breach that is promptly cured ... the unrefuted evidence indicates that the plaintiff has not paid the complete rent due in August 2003. Accordingly, the Supreme Court properly granted the motion of the defendants and third-party defendant for summary judgment dismissing the complaint.
How does one reconcile the outcome of this case with the recent holdings of the appellate courts of the First Department and the New York State Court of Appeals?
In decisions relating to lease defaults, these other courts appear to be suggesting a mere "default" will not trigger a tenancy's forfeiture nor support a judgment for rent, legal fees or other charges due under the agreement or accompanying guaranty. Some formal notice (or series of notices) need first ensue.
[See, for example, our analysis of Madison Ave. Leasehold, LLC v. Madison Bentley Assoc. LLC., wherein both the Appellate Division, First Department, and the Court of of Appeals refused to hold two guarantors liable for the payment of their dealership's rent notwithstanding the unambiguous language of the governing guaranty. To review that post, please click on the following link: http://www.nyrealestatelawblog.com/2006/12/when_is_a_default_a_default.html]
Stipulations -- agreements reached within the context of litigation -- are much like any other contract and are governed by many of the same legal precepts and principles. In summary nonpayment and holdover proceedings, for example, stipulations are frequently used to resolve those disputes and outline the parties’ respective performance obligations, payment requirements, and any other pertinent terms and conditions.*
Once signed, will a court allow a participant to withdraw from the deal if it is later determined that the party was misinformed or in error as to an operative fact?
The answer will depend on a variety of factors, including whether the litigant was represented by counsel at the time the agreement was made. Harmless or inconsequential mistakes have been excused, as have errors which cause "prejudice" or harm. But if the decision was the result of “negligence or carelessness,” relief will likely be denied, as was demonstrated in the case of Waterside 1 LLC v. Christian.
In that particular dispute, the landlord sued its tenant in the Queens County Civil Court for all unpaid rent that had accrued from November 2002 through April 2003 (in the amount of $554.33 per month). On December 29, 2003, the tenant agreed to settle the matter by paying $5,474.74.
After that agreement was reached, Waterside discovered that the State Division of Housing and Community Renewal (DHCR) had increased the tenant’s rent and that the amount reserved in the parties’ stipulation did not accurately reflect the full legal rent due. When Waterside returned to the Queens County Civil Court to correct the error, that effort was rebuffed.
On appeal, the Appellate Term, 2nd and 11th Judicial Districts, offered further resistance and chastised Waterside for its “carelessness.” The appellate court noted in its decision as follows:
Where a mistake of fact is attributable to the negligence or carelessness of the party seeking to vacate a stipulation, and there has been no fraud or deceit on the part of the other party thereto, such a mistake will not constitute a basis to set aside the agreement … Since landlord had an opportunity to ascertain whether the rent had been restored prior to the commencement of the proceeding and the execution of the stipulation of settlement, it cannot avoid the consequences of its own carelessness by seeking to have the stipulation vacated. Accordingly, the order of the court below is affirmed.
Interesting stuff is happening at the Appellate Division (First Department) these days, particularly when it comes to awarding a "prevailing party" legal fees, costs and disbursements.
It has long been the "American rule," that in the absence of some regulation, contractual arrangement, or statutory entitlement to recover one's fees and costs within the context of litigation, each side bears its own costs.
While lease provisions authorizing the recovery of attorneys' fees have long been honored,* in Horwitz v. 1025 Fifth Ave., Inc., the Appellate Division, First Department, suggests there may now be a new twist when it comes to the enforcement of such provisions. In that case, the appellate court refused to award fees even in the face of an agreement authorizing the recovery of such charges.
The operative language in the parties' lease was as follows:
"[I]f the lessee shall at any time be in default hereinunder, or if the lessor shall institute an action ... against the lessee based upon such default, the lessee will reimburse the lessor for the expense of attorneys' fees ...."
That wording reads pretty clearly and unambiguously to us. Yet, the AD suggested that its refusal to award the landlord fees was based on a "public policy" disfavoring the grant of such relief.
Huh?
Here's the court's take on the current state of the governing law:
It is settled that the interpretation of the provisions of a lease is governed by the same rules of construction applicable to other agreements ... and in those instances where the intent of the parties is clear and unambiguous from the language employed on the face of the agreement, the interpretation of the document is a matter of law solely for the court ... Further, New York public policy disfavors any award of attorneys' fees to the prevailing party in a litigation ... and a provision in an agreement allowing the recovery of attorneys' fees that are "incidents of litigation" should be strictly construed ....
It had always been our impression that, within summary proceedings and other real-estate litigation, a "prevailing party" could seek to recover its fees and costs.
In this particular instance, although the landlord -- a cooperative -- had alleged a breach of the governing lease (triggered by the tenant's refusal to remove a 30-foot awning anchored to the exterior of the building), legal fees could not be recovered since the co-op's predicate notices were defective and there was never a judicial finding of a "default."**
Yet, where in the agreement does it require that there be a "judicial finding" of a default in order for fees to issue? All that was required was that a default occur.
Straining to avoid awarding relief in the cooperative's favor, here's what the appellate court concluded:
Plaintiffs, however, have never been found in default of the lease by either this Court or Supreme Court. Indeed, Supreme Court's June 19, 2003 decision and order specifically found that plaintiffs were not in default of the lease, and that the cooperative board, as of the time of that order, had not formally acted to find plaintiffs in default. This Court's subsequent decision and order dated May 27, 2004 ..., left unaffected that part of the order of Supreme Court which found that the notices to cure and terminate were facially defective, and issued a declaration "in favor of defendant that it is entitled to enforce its house rules with respect to the removal of awnings." Such declaration, however, contrary to Supreme Court's finding, does not equate to a judicial finding of default.
We are unable to embrace this logic.
If the cooperative had the power to direct the awning's removal, why isn't the tenant's resistance to comply with that directive a default?
What happened to the fundamental contract-law precept -- recited by the court in its own decision -- of enforcing terms of an agreement, as written? That end result does not appear to have happened here.
=============== *Under New York State law, Real Property Law section 234, when a residential lease provides that a landlord may recover its fees and costs incurred during the course of a lawsuit, a tenant will also entitled to seek such reimbursement -- should it prevail on its claims or defenses -- even when the wording of the parties' agreement is silent as the tenant's right to recoup such charges. This reciprocality often serves to deter landlords from commencing frivolous or baseless suits against tenants.
**Interestingly, some two years earlier, the AD concluded the cooperative could enforce its house rules and had the authority to direct the awning's removal. For a copy of that earlier decision, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2004/2004_04235.htm
Before a landlord may begin a nonpayment proceeding, the governing statute requires that a "demand of the rent" be made upon a tenant.* This formal request for the payment of all outstanding sums due may be in oral or written form -- unless the landlord's option to resort to an oral demand is expressly precluded by the parties' lease agreement.
Publications disseminated by the New York City Civil Court, such as "A Tenant's Guide to the New York City Housing Court," reinforce the critical nature of this "condition precedent." The "Tenant's Guide" notes, in relevant part, as follows:
Before you can be sued, the landlord or someone working for the landlord must demand the overdue rent from you and warn you that, if you do not pay, you can be evicted. You can be told this orally or in writing. If your lease requires that this kind of demand be given in writing, then it must be in writing. If it is in writing, the rent demand must be delivered to you at least three days before the day that the court papers are served, unless your lease requires more days.
You can imagine our surprise when, just the other day, we came across an appellate decision which dismissed a landlord's nonpayment case for neglecting this fundamental step.
In Community Hous. Innovations, Inc. v. Franklin, the Petitioner was apparently trying to be a bit too "innovative." Although it had won a nonpayment case which it had filed against its tenant in the Suffolk County District Court, on appeal, the Appellate Term, 9th and 10th Judicial Districts, reversed the outcome. For reasons that are unclear to us, the landlord elected to skip a step or was unable to prove (to the court's satisfaction) that an oral or written demand had been made. Here's the information the decision supplies:
As an element of its prima facie case in a nonpayment summary proceeding, a landlord must establish either that a personal demand for rent was made or that a three-day notice was served in the manner prescribed in RPAPL 735 (RPAPL 711 [2] ... In the instant case, landlord failed to establish either that a personal demand for rent was made or that a three-day notice was served in accordance with the statute, and tenant's attorney timely raised objection to this failure at trial. Under the circumstances, the final judgment must be reversed and the petition dismissed ....
*Real Property Actions and Proceedings Law (RPAPL) section 711(2).
**By the way, after a nonjury trial, the landlord had been awarded a whopping $1,981.12. (The appeal had to cost more than what was originally sought to be recovered!)
At one time or another, all of us have paid our rent or maintenance late. While these lapses typically result in the imposition of a late fee when that charge is authorized by the lease and is reasonable in nature, tardiness -- when repetitive and unjustifiable -- can result in a tenancy's termination.
Commonly known as a "chronic non-pay" or, more aptly, a "chronic rent delinquency holdover proceeding," this kind of summary proceeding is usually filed when a tenant has demonstrated a prolonged pattern of late rent payments.
Courts have considerable latitude in structuring a resolution of these kinds of cases (particularly when the forfeiture of a long-term regulated tenancy is at issue), and can direct that the tenant be given a probationary period within which the tenant would be required to remit the rent on a timely basis or suffer an eviction. Before granting this relief, courts will weigh such factors as the:
length of the tenancy;
rent-payment history;
circumstances and severity of the rent defaults; and
tenant's financial status and other indicia of credit-worthiness.*
When a court determines that imposing a probationary period would be futile, or, when a tenant violates the conditions of such an arrangement, the tenant's eviction is an inevitable reality.
By way of example, in 1675 Realty LLC v. Castillo, the landlord was compelled to file six nonpayment proceedings against its tenant over the course of 38 months. And, in each instance, the tenant presented no bona fide basis for its default. As a result, the Appellate Term, First Department, concluded that in the absence of any justification for the tenant's conduct, relief was appropriately awarded in the landlord's favor and the tenant evicted from the subject residential space.
In yet another case, 255 E. 10th St., LLC v. Durante, the tenant repeatedly failed to remit timely rent payments, even during the course of the probationary period that had been imposed by the court. Faced with the tenant's noncompliance, the Appellate Term, First Department, concluded that "a stay of execution of the warrant of eviction was unwarranted."
Finally, in Riverton Assoc. v. Garland, the landlord's filing of nine nonpayment proceedings over the course of decade -- and the absence of any bona fide defenses to those rent-collection cases -- triggered a tenant's removal from a Manhattan apartment.
Are you looking to avoid painful nicks and bumps?* Then you better read the case of W 54-7 LLC v Schick.
Prior to Schick, landlords were able to argue that any defects in a predicate notice -- particularly as they related to service of that document -- were waived if not preserved in a tenant's responsive pleading or pre-answer motion to dismiss.
In this particular instance, the appellate court was of the opinion that the tenant's failure to preserve a defense relating to the legal sufficiency of a cure notice did not negate the landlord's eventual burden, at trial, to demonstrate that an appropriate predicate notice had issued in the holdover case. As the AT noted in its decision:
Tenant's pre-trial motion to dismiss the holdover petition was properly granted, there being no serious dispute that landlord's service by mail of the 10-day notice to cure was untimely under the rule enunciated in Matter of ATM One, LLC v Landaverde, 2 NY3d 472 (2004). Compliance with statutory notice requirements represents a condition precedent to maintenance of a summary eviction proceeding (see 170 W. 85th St. Tenants Assn. v Cruz, 173 AD2d 338,339 [1991]), and the burden remains with the landlord to prove that element of its case at trial (see generally Siegel, New York Practice, § 215, at 353 [4th ed]). Thus, the tenant's failure to raise the notice issue in his initial dismissal motion or to plead it with specificity in his answer did not serve to relieve landlord of its trial burden to establish compliance with the Landaverde rule — a burden which, as indicated, landlord could not meet were this case to proceed to trial. Landlord's reliance on Priel v Priel (NYLJ, March 5, 1993, at 25, col 3 [App Term, lst Dept]) for the proposition that tenant waived the right to object to the untimely service of the cure notice, is misplaced, since that case was fully tried and a possessory judgment was issued before tenant sought to dismiss the petition via a post-trial motion to "reargue" based upon the absence of a predicate notice.
The outcome of this case is at odds with the prior appellate precedent which holds that objections pertaining to the adequacy or sufficiency of a "condition precedent" are waivable.
How does one reconcile the outcome of this case? Beats us!
What does one come away with from the decision? To avoid getting marred, a landlord better get the elements of its case right, the first time.
In 501 N.Y. LLC v. Anekwe, 501 commenced a nonpayment proceeding against its tenant, Nkiru Anekwe, seeking to recover rent for the period January 2004 through May 2005. Ms. Anekwe countered that she was entitled to a rent reduction or "abatement" predicated upon the landlord's breach of the warranty of habitability -- a state law which seeks to ensure that residential units are free of "dangerous, hazardous or detrimental" conditions that may pose a threat to the occupants' "life, health or safety."*
In this particular instance, Ms. Anekwe alleged a series of violations, the most significant of which was a "roach infestation."** According to the decision, the tenant's "lower kitchen cabinets" had been removed by the landlord's exterminator, and the area sprayed, but that effort did little to abate the underlying condition. As a result, the tenant was reportedly unable to cook in her kitchen and was forced to keep all her food "in the living room in cartons."
After trial, the Housing Part of the Kings County Civil Court awarded the tenant a 5% abatement finding, in part, that the tenant had failed to afford the landlord adequate notice of the conditions and denied the owner access to the apartment to effect the needed repairs. On appeal, the Appellate Term, Second and Eleventh Judicial Districts, disagreed and noted, in part, as follows:
Contrary to the findings of the lower court ... the record establishes that landlord was fully aware of the severe vermin infestation in tenant's apartment and that its efforts to correct the condition, such as by providing tenant with ant spray, were ineffectual. In fact, a class "B" violation had been placed on the premises in March 2002 for the vermin infestation, and another such violation was placed in 2005. Moreover, in a prior nonpayment proceeding between the parties two years before the instant proceeding, tenant was awarded approximately a 30% abatement for the conditions in the apartment, including the vermin infestation.
In view of the severity and duration of the conditions, the landlord's knowledge of their existence and ineffectiveness in correcting them, the appellate court upped the abatement to 40% of the rent sought.***
While 40% may seem to be a substantial victory to some, the AT's decision advises that the tenant has been living with an infestation "since 2001." In view of that fact, and the landlord's apparent recalcitrance, wouldn't a higher rent abatement have been in order?****
**Ms. Anekwe also allegedly suffered from insufficient heat, cracked wall tiles, inadequate water pressure (bath) and leaky plumbing.
***The AT also did not believe that the record supported the landlord's claim that the tenant had impeded the repair effort by refusing to grant access to her unit.
****The tenant's rent was adjusted by some $3,000. (Contestants on NBC's hit show Fear Factor are compensated a whole lot more! If you happen to be unfamiliar with the show, check out this this link: http://video.nbc.com/player.html?dlid=23053)
CLAIM PRECLUSION IN A SUMMARY PROCEEDING? YOU BETCHA!
Wendnew LLC, was sued by its landlord -- The Gallery at Fulton Street, LLC -- for monetary damages arising from Wendnew's breach of its commercial lease. Within the context of a New York County Supreme Court case, the tenant disclaimed liability for $514,039.97 (some three years of rent being sought) since it had allegedly suffered a "constructive eviction" which annulled any obligation to remit payments.
Typically, a "constructive eviction" occurs when a landlord's "wrongful acts substantially and materially deprive the tenant of the beneficial use and enjoyment of the premises ... The tenant, however, must abandon possession in order to claim there was a constructive eviction." Barash v. Pennsylvania Terminal Real Estate Corp., 26 NY2d 77 (1970).
In this particular case, both the Supreme Court, and the Appellate Division, First Department, found a few problems with Wendnew's claim.
First, the tenant had an opportunity to raise the "constructive eviction" defense in a previously initiated summary nonpayment proceeding, but failed to do so. In fact, the tenant defaulted in that litigation -- that is, failed to appear in court to oppose the summary proceeding -- and a court-ordered eviction ensued. As a result, both the Supreme Court and the Appellate Division were of the opinion that this inaction prevented or "estopped" the tenant from raising the constructive-eviction defense in the Supreme Court case later filed by the landlord.
Second, since the tenant did not abandon the subject space (prior to the court-ordered eviction), its constructive-eviction defense was not supportable as a matter of law. As the appellate court observed:
The prior summary proceeding, wherein plaintiff's petition for possession was granted, necessarily decided that defendants remained in possession and plaintiff had properly terminated the lease. A default judgment in a summary proceeding for non-payment of rent is conclusive between the parties as to any facts alleged in the petition or affidavit that are required to be alleged as a basis for the proceeding ... Defendants' continued possession was such a fact, and negates their constructive eviction defense.
And, finally, although the landlord-tenant relationship had been terminated by the issuance of a warrant of eviction in the nonpayment case, neither that termination nor the language of the parties' agreement relieved the tenant of its continuing liability under the lease.
This particular case clearly demonstrates that turning a blind eye to legal papers one receives -- even within a nonpayment or holdover proceeding -- could have severe consequences and forever foreclose a litigant's ability to wend anew.
Typically, a "default" arises upon a party's breach or noncompliance with a contractual term or condition. And, in order to provide a corrective remedy and avoid a possible forfeiture, many agreements will usually afford the party deemed in breach with an opportunity "to cure" or correct the underlying violation.
Leases are no different. At least so we thought until the Court of Appeals issued its decision in Madison Ave. Leasehold, LLC v. Madison Bentley Assoc. LLC. In that case, Arthur and Brian Miller each agreed to be personally responsible for the payment of their auto dealership's lease-related obligations for certain Madison Avenue space. That document provided, in part, as follows:
[I]n the event Tenant shall not have been in monetary default under the Lease at any time during the first three (3) years of the Lease, this Guaranty and Guarantor's [sic] obligations thereunder shall cease and terminate upon the third (3rd) anniversary of the Commencement Date.
On September 29, 2003, some three years and three months into its lease, the dealership stopped paying the rent and vacated the space. The landlord later filed suit seeking damages for all rent that due for the balance of the lease term [October 2003 to June 2010], discounted for present value.
Since the parties' agreement provided that rent was due "in advance on the first day of each calendar month," and the dealership consistently paid rent late, the landlord argued that the Millers were personally liable for the sums sought. The New York County Supreme Court responded to that argument with a dismissal of the case against the guarantors finding that the landlord had "waived" its objection to the tenant's default by repeatedly accepting the late-rent tenders "without protest and without taking any action," like issuing a default notice or otherwise declaring the tenant in default of the governing lease. On appeal, the Appellate Division, First Department, affirmed the dismissal, noting as follows:
To determine whether the guaranty ever became effective and whether it remained in effect at the time Bentley vacated the premises, we must look to the lease to determine whether there was a "monetary default" by the tenant. If there was no "monetary default" under the lease, the condition precedent was not fulfilled and the guaranty, together with its "no waiver" provisions concerning landlord's enforcement of its rights and remedies, never had any force and effect. As previously stated, because landlord, by a course of conduct extending over a period of years, waived the tenant's late payment of rent, there was no "monetary default" by the tenant under the lease during the applicable three-year period, the guaranty neither took effect nor was extended, and the guarantors were never subject to its terms and obligations. Once waived, the default in timely payment of rent is extinguished and cannot later be revived, like a phoenix, into a material default for the purpose of extending the period of the collateral guaranty. Thus, the loss sought to be recouped in this action, resulting from a default (vacatur of the premises) that occurred three years and three months after the commencement of the lease, is not recoverable from the individual defendants.
The thrust of the AD's argument was that there should have been some formal notice that the acceptance of the late rent payments was without prejudice to the landlord's rights under the guaranty. As the AD observed:
Having failed, over the course of three years, to give Bentley any notice that timely payment of rent would be required, landlord may not now insist that its tenant's failure to strictly comply with the timely payment condition of the lease constitutes a default.
On December 19, 2006, the state's highest court affirmed the AD's disposition of the case but applied a different -- and more troubling -- analysis. After examining the language of the governing lease's default provision, the Court of Appeals came to the following conclusion:
In the event of a default in the payment of rent, paragraph 17 requires the landlord to notify the tenant of the default and, after receipt of the notice, the tenant will have seven days to cure the deficiency. Even if the default is not cured within seven days of the notice, the lease provides that the landlord must send another notice giving the tenant three additional days to cure, meaning that the tenant has 10 days after it receives the first notice from the landlord to remedy any deficiency relating to the payment of rent. This provision clearly distinguishes between a default in the payment of rent and other types of defaults, with the former referred to at the end of the provision as a "monetary default" under certain circumstances.
Nothing in the language of the lease suggests that rent that was paid in full each month, albeit in an untimely manner, would nonetheless fall within the category of "monetary default." To the contrary, it appears that a default in the payment of rent does not ripen into a "monetary default" until the landlord has first served a notice of default and the default has "remain[ed] uncured" for at least seven days because it is only in that context that a default in the payment of rent is characterized as a "monetary default."
A creative analysis but, in our opinion, just plain wrong. In fact, we believe the case's outcome derives from a strained reading of the underlying lease agreement.
This language found in a lease's "default" provision is typically operative when a landlord wishes to exercise the "conditional limitation" -- that is, bring the lease to a premature end and evict a tenant from the space as a result of a breach. That language usually does not define when a "default" has occurred. Rather, it governs the steps that need to be taken when a landlord wishes to terminate the tenancy based on that "default."
In this particular instance, the state's highest court seems to be suggesting that -- according to its reading of the operative conditional limitation language -- the tenant was not in "default" of its obligation to pay rent unless and until one or more predicate notices issued. That strikes us as nonsensical.
We submit that the "default" arose upon the tenant's failure to remit rent as of the first of the month, as contractually required. And, that occurrence should have been sufficient to trigger personal liability under the guaranty (as a result of the clear and unequivocal wording of that document). As we have observed in our prior blog post on this topic -- the Millers knowingly and willingly agreed to an "absolute and unconditional Guaranty of payment and performance," which was enforceable "without the necessity for any suit or proceedings on Landlord's part of any kind or nature whatsoever against Tenant, without the necessity of any notice of non-payment, non-performance or non-observance (except as expressly required under the terms of this Guaranty), or ... of any other notice or demand to which the Guarantor might otherwise be entitled, all of which the Guarantor expressly waives ...."
Additionally, the guaranty specified that it would not be "terminated, affected, diminished or impaired by reason of the assertion, or the failure to assert, by Landlord against Tenant of any of the rights or remedies reserved to Landlord pursuant to any provisions of the Lease."
Finally, the agreement provided that the guaranty would "in no way be affected, modified or diminished by reason of ... any modification or waiver of or change in any way of the terms, covenants, conditions or provisions of the Lease by Landlord and Tenant, or by reason of any extension of time that may be granted by Landlord to Tenant, or by reason of any dealings or transaction or matter or thing occurring between Landlord and Tenant ...."
All that stuff reads pretty unambiguously to us. No "notices" of any kind were required to issue or otherwise be given to the guarantors (under the guaranty). Yet, the state's highest court elected to rely on the conditional-limitation language of the lease as a basis for relieving the Millers of their personal obligations. (So much for enforcing agreements, as written.)
If the court's analysis were taken to its logical extreme, a tenant would not be in breach of a lease until such time as a predicate notice issued declaring the tenant in default. And if that's the case, would the tenant then be entitled to yet another notice affording it an opportunity to cure or correct the default?
And, pray tell, if a tenant is never formally declared in default, when does the time start to run for statute of limitations purposes? And, how could a "default" be "waived" by a landlord if the violation's existence has never "ripened," or otherwise been formally acknowledged?
Has our state's highest court added yet another needless layer of complication and confusion to landlord-tenant relationships by its holding in this case?
Various statutory protections are in place for those tenants who are serving in the military or are dependent on those on active duty. By way of example, the Servicemembers' Civil Relief Act provides that an action or proceeding may be stayed when a court finds that:
1) a servicemember is on activity duty or was relieved of active duty within 90 days of the stay request;
2) the military service materially affects the servicemember's ability to defend the case; and
3) the servicemember has notice of the pending action or proceeding.
But these protections are far from automatic. By way of example, in Corrado v. Harris, a Justice Court of the Town of Mount Pleasant, in Westchester County, refused to stay a holdover proceeding based on a co-tenant's military service. On appeal, the Appellate Division, 9th and 10th Judicial Districts, affirmed since the tenant had failed to demonstrate that her ability to defend the case was "materially impaired," and, no letter from the co-tenant's commanding officer--reflecting that cotenant's service prevented a court appearance--was produced.
The powers of New York's various courts are defined by statute and our state's Constitution. And, in some instances, this authority is severely limited or circumscribed.
By way of example, a litigant filing a case in the New York City Civil Court may not assert a claim in excess of $25,000. (The exceptions are countersuits--or counterclaims--asserted in that forum, and proceedings brought in the Civil Court's Landlord-Tenant Parts. No dollar limitations apply in those instances and the sums sought to be recovered may be of any amount.)
When a dispute exceeds the monetary ceiling, the court is without "subject matter jurisdiction" to entertain the dispute and the matter must either be dismissed (without prejudice to the refiling of the dispute in the appropriate forum) or transferred to the correct courthouse.
In 1443 York Avenue Realty Co. v. Ronning, landlord 1443 York Avenue Realty Company sued Nancy Ronning, the guarantor of a residential lease, for monies due under that agreement. Ms. Ronning and her daughers--who were the named tenants--commenced a separate lawsuit against the owner, seeking damages for rent overcharge; a claim, when tripled, totaled $75,000.
While the facts are somewhat complicated--in that two cases were eventually combined or consolidated "for all purposes"--of import to our analysis is that the consolidation did not enable the Ronnings to maintain their $75,000 claim in the Civil Court. As the Appellate Term, First Department, observed:
A demand for treble damages, much like a demand for punitive damages, is parasitic in nature and does not constitute a separate cause of action distinct from the substantive cause upon which it is grounded ... Inasmuch as the rent overcharge complaint pleaded not separate, distinct claims, but a single cause of action in excess of the court's $25,000 monetary ceiling...the court was without subject matter jurisdiction over the matter ... In such circumstances, the proper course was to transfer the consolidated actions to Supreme Court pursuant to Article VI, Section 19(f) of the New York State Constitution ....
Thus, according to the AT, the Civil Court may neither play host to costly parasitic claims nor permit litigants to impermissibly leech that forum's judicial resources.
According to an Appellate Division decision released last week, landlords who sexually harass their tenants--even those of the same sex--could get hit with substantial fines and penalties. In Matter of State Division of Human Rights v. Stoute, a property owner was allegedly interested in pursuing a sexual relationship with one of his male tenants and, when those efforts were rebuffed, created a "sexually hostile housing environment" for that occupant.
In this particular case, the owner allegedly:
made "sexually offensive comments and gestures" to the tenant and his guests;
advised the tenant's friends that he wished to have sexual intercourse with the tenant;
"spied"on the tenant (through a curtained, ground-floor window) while the tenant was engaged in sexual activity;
entered the tenant's apartment (and bedroom) without advance notice;
photographed the tenant and his guests as they entered and exited the building;
simultaneously exited and followed the tenant when the tenant would leave the building;
threatened the tenant with "physical force;" and
eavesdropped on the tenant's conversations.
After a hearing, at which the landlord did not participate, an Administrative Law Judge (ALJ) with the New York State Division of Human Rights (NYSDHR) found in the tenant's favor and awarded $7,500 in compensatory damages. On administrative appeal to the NYSDHR, the landlord later objected to the ALJ's findings and alleged that the tenant was a "flagrant exhibitionist," who refused to properly cover his ground-floor windows and who engaged in sexual activity in full view of passersby. The owner further asserted that his actions were in response to legitimate community and building-related complaints and security concerns, and that the tenant was the "epitome of dishonesty" who was attempting to extort monies from the owner.
The NYSDHR Commissioner was unpersuaded by these latter arguments and concluded that the record supported the ALJ's findings that the owner's conduct was "severe and pervasive" and adversely impacted the tenant's ability to use and enjoy his apartment. Since the state's Human Rights Law prohibits a building owner from engaging in discriminatory housing-related acts, the Commissioner determined that same-sex harassment comprised a violation of that statute. And, as a result of the tenant's "mental anguish," the Commissioner upped the compensatory-damage award to $10,000 and further directed that the landlord to "cease and desist" from engaging in such conduct in the future.
When the landlord failed to pay the sum awarded by the agency, a special proceeding was commenced in the Kings County Supreme Court to enforce the award. Upon transfer of the case to the Appellate Division, Second Department, the appellate court ruled in the tenant's favor since all the requisite elements of a "hostile housing environment" had been demonstrated. As the court observed:
Here, substantial evidence supports the Division's determination that [landlord] sexually harassed the complainant, and in doing so violated the Human Rights Law. The Division relies on the hostile housing environment theory, and the record supports its determination that [landlord] created such an environment with respect to [tenant].
To prevail on a hostile housing environment theory, it must be shown that (1) the complainant is a member of a protected group, (2) he or she was subjected to unwelcome and extensive sexual harassment, in the form of sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature, which were not solicited or desired by the complainant, and which were viewed as undesirable or offensive, (3) such harassment was based on the complainant's sex, (4) such harassment makes affected a term, condition, or privilege of housing, and (5) if vicarious liability is claimed, the complainant must show that the owner knew or should have known about the harassment and failed to remedy the situation promptly....
Although the AD conceded that this was a case of "first impression"--in that it was the first time a sexual harassment remedy had been applied to the housing context--the appellate court did not believe that the case's uniqueness foreclosed a comparison to other awards in other kinds of cases considered by the agency. The court concluded that the $10,000 compensatory-damage award was well within the range of prior decisions and, in the absence of a punitive or punishment component, "entirely proper" under the circumstances.
Few appreciate the technical hurdles that await those who wish to sue a municipality like the City of New York (or one of its related entities). Before a lawsuit may be brought, the party seeking to sue must first file a "Notice of Claim"--a sworn, written document which outlines each injured individual's name and address, counsel's name and address, the factual particulars (date, time, place, and manner of injury), and the requested relief. And, you have only ninety (90) days--typically measured from when the loss or injury is incurred--to file that special notice. The theory behind this expedited, advance-notice requirement is to allow the City an opportunity to investigate the claim while the incident is relatively recent and the pertinent information and evidence are still readily available and accessible to the municipality.
Because it is an absolute precondition to a case's commencement, many refer to the Notice of Claim as a "condition precedent"--something that must first occur or the lawsuit may be dismissed. [For example, with respect to claims filed against the City of New York, a law known as the General Municipal Law (GML) governs the process. And that's where you will find that 90-day filing requisite. GML section 50(e)(1)(a).]
While the law typically excuses inconsequential errors or omissions in the Notice, failing to properly serve the document or to ensure its timely filing may be fatal. And, while there are appellate cases allowing Notices to be filed "late"--outside of the 90-day window--they should be viewed as the exceptions rather than the norm.
Some of the grounds which may excuse a late filing include:
death;
infancy;
mental or physical incapacity;
reasonable reliance on settlement representations (made by the municipality or an insurer); and
excusable error regarding the name of the public corporation.
Be forewarned: This analysis is not exhaustive. As a result, readers are encouraged to consult with counsel to confirm whether or not the criteria and timeframes discussed in this blog post apply to their particular case.
A case which reinforces the harsh realities of this area of the law is Astree v. New York City Transit Authority, (NYCTA). While the Queens County Supreme Court granted Ms. Astree's request to serve a late Notice of Claim, on appeal, the Appellate Division, Second Department, summarily discounted Astree's excuses--which included her inability to speak English, law office failure, and her lack of familiarity with the law's notice of claim requirements--and reversed the lower court's order, citing "prejudice" to the NYCTA as a result of the agency's inability to conduct a "prompt investigation" and "maintain a defense."
Ever wonder what is included in your commercial or residential space when a lease uses the word "premises?" According to the State's highest court, the definition of that term will be governed by the parties' agreement.
In South Road Assoc., LLC v. International Business Machines Corp., a dispute arose as to whether the word "premises" solely encompassed the buildings' interior areas or also included the land upon which the structures had been erected.
IBM occupied several buildings in Poughkeepsie, New York, pursuant to a 1981 lease with its landlord. The agreement described the "premises" in question as follows:
That the Landlord hereby leases to the Tenant and the Tenant hereby hires and takes from the Landlord the space being more particularly shown on the attached floor plan designated Exhibit 'A' (hereinafter called the 'premises') consisting in the aggregate of 113,400 gross square feet in two buildings consisting of 113,400 gross square feet (hereinafter called the 'buildings') situated on real property (hereinafter called the 'land') located at 622 South Road (Route 9), and a Water Tower and appurtenances in the Town of Poughkeepsie, State of New York (her[e]inafter referred to as Buildings 952, 982).
During its tenancy, IBM installed an underground chemical-waste storage tank which leaked and contaminated the site's bedrock, groundwater and soil. While IBM accepted responsibility for the spill and agreed to abate the pollution, the landlord still commenced an action in the Dutchess County Supreme Court alleging IBM had breached its lease by failing to return the premises in "good order and condition."
With respect to that particular obligation, the governing agreement provided that at the end of the lease term:
[T]he Tenant will remove its goods and effects...and will (a) peaceably yield up to the Landlord the premises in good order and condition, excepting ordinary wear and tear, repairs required to be made by the Landlord, or damage, destruction or loss by fire or other casualty or by any other cause...and (b) repair all damage to the premises and the fixtures, appurtenances and equipment of the Landlord therein, and to the building, caused by the Tenant's removal of its furniture, fixtures, equipment, machinery and the like and the removal of any improvements or alterations.
When the parties moved for summary judgment--that is, a judicial decision deciding the case based solely on the papers presented by the litigants, without the need for a formal evidentiary hearing or trial--the Dutchess County Supreme Court found in the landlord's favor. The Appellate Division, Second Department, reversed concluding that the "clear and unambiguous" language of the parties' lease limited the encompassed space to the building's interior areas and could not "be construed to include the surrounding soil and groundwater." On appeal, the New York State Court of Appeals sided with the Appellate Division and concluded as follows:
Since the meaning of "premises" is clear and unambiguous in the lease, extrinsic evidence such as the conduct of the parties may not be considered. IBM's conduct--placing underground storage tanks in the surrounding land and cleaning the resulting pollution--is not sufficient to create an ambiguity in the lease where the language is clear...The contract, read as a whole, clearly and consistently uses the term "premises" to refer only to interior space and we cannot rely on extrinsic evidence to find otherwise.
Clearly, by this decision, the state's highest court is cautioning all parties to a lease to ensure that their agreements are appropriately premised.
In 1997, Bates Advertising entered into a sixteen-year lease with its landlord, 498 Seventh, LLC, for 25% of the building located at 498 Seventh Avenue in Manhattan. The 85-page lease, which provided for a base rent totaling some $100 million over the entire tenancy term, addressed "Landlord's Work," and provided a list of eleven "required alterations." Pursuant to that agreement, if the landlord failed to "substantially complete" nine of those 11 items, the tenant would be entitled to abatement of one-half day's rent for each day's delay, and, a full day's abatement for the remaining two items (one of which was the installation of a "Class E fire alarm and communications system").
In 1999, Bates moved into the space and commenced paying rent--after an initial, previously negotiated rent-free period--subject to its rights under the lease's rent-abatement clause. Alleging that the required work remained unfinished, Bates subsequently filed suit in the New York County Supreme Court asserting that it had been denied the "benefit of its bargain," in that it did not receive "top-shelf commercial accommodations" as originally contemplated and that the premises' condition presented a "safety and security" threat to company employees and adversely impacted the company's "image in the international advertising and marketing industry."
The Supreme Court partially dismissed the advertising company's case, believing the rent-abatement clause was an "unenforceable penalty," but allowed Bates to pursue other contract-related damages. On appeal, the Appellate Division, First Department, reversed. Although it felt the Bates would have difficulty proving its "image" and business damages, the Appellate Division reinstated the rent-abatement claim since it was a "vital part of the deal," and sent the matter back for further review and determination by the trial court.
After a bench trial, the Supreme Court concluded the landlord had failed to provide the necessary fire alarm and communications systems for some 412 days and awarded the tenant a rent credit of $4,339,528.61. On appeal, the Appellate Division affirmed the award. As did the New York State Court of Appeals.
While the tenant's representative had testified that the rent-abatement clause had been negotiated as a means of "incentivizing" the landlord and served as a "club over [the landlord's] head to make sure...the work [got] done," the Court of Appeals refused to characterize the provision as an "illegitimate and unenforceable" penalty, noting as follows:
[T]he prospect of damages in the event of breach may always be said to encourage parties to comply with their contractual obligations. Liquidated damages are not transformed into a penalty merely because they operate in this way as well, so long as they are not grossly out of scale with foreseeable losses. In this case, we agree with the Appellate Division that 498 has not demonstrated that the rent abatements are conspicuously disproportionate to Bates's foreseeable losses.
This case leaves us with a number of unanswered questions. Chief among them is whether the $4.3M adjustment was entirely appropriate given the absence of a fire-related incident or the issuance any fines or penalties issued by a governmental authority. What were the "losses" suffered by the tenant?
Since the decision is conspicuously silent as to the actual amount of the tenant's "losses" and how that sum correlated with the mult-million dollar award the tenant received, we are unable to discern whether or not the case's outcome resulted in a "windfall" to the tenant.
Some landlords and tenants believe that written lease agreements are to be avoided at all costs because they bind the parties to the agreed-upon time frame and impede any flexibility to end the relationship sooner should circumstances change. Many also feel that the writing is more of a hindrance--a needless formality--and that a handshake should suffice.
Be disabused of that notion.
While leases allow tenants to remain in exclusive possession and control of their space for the stipulated duration, should problems later arise, these documents frequently provide the parties with a number of legal rights and remedies that would not otherwise exist.
For example, if one were to sue the other during the course of the landlord-tenant relationship, the individual being sued would ordinarily be able to assert any claim for damages they might have against the one suing them--known as a "counterclaim"--and could request that the matter be heard by a jury. That request for a jury trial--a matter of constitutional right--would convert a simple rent nonpayment or holdover proceeding to a costly and delay-ridden process to say the least. Taking the typical case from weeks to months to reach a disposition and significantly exacerbating legal fees and costs.
Most lease forms avoid this problem with counterclaim and jury-trial waivers; provisions wherein the parties agree that they will not seek a jury trial or raise "unrelated" counterclaims in the event a dispute in which they are involved is taken to court. (To date, appellate decisions continue to give these waivers full force and effect.) By "unrelated," we mean that courts are unlikely to entertain countersuits that are not somehow "intertwined" with the main case or case-in-chief. So, while a court in a rent nonpayment case would allow a tenant to raise the fact that an apartment was riddled with unsafe conditions or that essential services had been denied, and would award a tenant an offset against the rent due or direct a refund of such sums paid, a judge would likely be less inclined to entertain a property-damage or personal-injury claim as a result of the waiver language. These latter claims would be severed without prejudice to the tenant bringing them in a different case or forum (like a small-claims case) and would allow the main claim--the nonpayment or holdover case--to proceed to conclusion without needless delay or complication.
Along those same lines, most lease forms provide that in the event a landlord is forced to bring a case against the tenant, and wins, the landlord would be entitled to recover its attorneys' fees and costs. There typically would be no entitlement to such fees in the absence of such language. (Under the "American rule," each side to a lawsuit bears its own fees and costs, in the absence of a lease agreement or statute which provides to the contrary.)
Here's the kicker. Under New York State law, when a residential lease provides that a landlord may recover its fees and costs incurred during the course of a lawsuit, a tenant will also entitled to seek such reimbursement--should it prevail on its claims or defenses--even when the wording of the parties' agreement is silent as the tenant's right to recoup such charges.* This reciprocality often serves to deter landlords from commencing frivolous or baseless suits against tenants--a deterrent that would not exist if the parties operated on the basis of an oral agreement or handshake.
Finally, outside of rent regulation (where tenants are afforded the option between a one or two year lease), there are very few restrictions on how long or short a free-market lease may be. It's possible to enter into a lease for as little as a several hours in a day or as long as many decades; with the ability to provide for the premature termination of the agreement upon notice given by one to the other. With free-market leases, there's also no prohibition to an arrangement allowing a tenancy to end prior to the stated termination date (subject to some advance notice, for example), thus avoiding the possibility that one is locked into a long-term arrangement with all of its attendant responsibilities and liabilities.
Thus, when properly structured, there's no question that a written lease can be a landlord's and tenant's best friend.
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* NOTE: This statutory protection--Real Property Law section 234--applies to residential leases only and provides as follows:
Tenants' right to recover attorneys' fees in actions or summary proceedings arising out of leases of residential property. Whenever a lease of residential property shall provide that in any action or summary proceeding the landlord may recover attorneys' fees and/or expenses incurred as the result of the failure of the tenant to perform any covenant or agreement contained in such lease, or that amounts paid by the landlord therefor shall be paid by the tenant as additional rent, there shall be implied in such lease a covenant by the landlord to pay to the tenant the reasonable attorneys' fees and/or expenses incurred by the tenant as the result of the failure of the landlord to perform any covenant or agreement on its part to be performed under the lease or in the successful defense of any action or summary proceeding commenced by the landlord against the tenant arising out of the lease, and an agreement that such fees and expenses may be recovered as provided by law in an action commenced against the landlord or by way of counterclaim in any action or summary proceeding commenced by the landlord against the tenant. Any waiver of this section shall be void as against public policy.
It's a decision that made the news and has been analyzed by commentators in such publications as The New York Times and the New York Law Journal. But the outcome in Poyck v. Bryant, didn't come as a surprise to those of us in the landlord-tenant arena who are all too familiar with the existing statutory protections which govern residential tenants' safety and welfare. (In actuality, we were wondering what took so long.)
In a case of first impression, a Judge of the New York County Civil Court was asked to decide whether secondhand smoke -- which permeated a residential-building's hallways and an adjacent apartment unit -- somehow violated state law and triggered conditions which made the space untenantable for a smoker's neighbors.
In the absence of any prior caselaw on the subject, the Honorable Shlomo S. Hagler concluded that secondhand smoke could comprise a breach of the state's "implied warranty of habitability" -- Real Property Law section 235-b -- a statute which imposes an affirmative duty or obligation on lessors to ensure that residential units are free of conditions which would pose a threat to the occupants' health, safety and well-being, even when the violative acts are caused by a third party.
Michelle and Stan Bryant were the tenants of a deregulated fair-market space situated in a condominium building located at 22 West 15th Street, here in Manhattan. In March of 2001, new neighbors -- who happened to be smokers -- moved into the adjoining apartment and their tobacco smoke wafted into the Bryants's unit (and permeated the building's common areas). Although the Bryants noted their complaints (both orally and in writing) to the building's superintendent, the unit's owner (Peter Poyck), and the owner's attorney, the smoke condition continued unabated. As a result, on August 1, 2001, the Bryants opted to break their lease (which was then scheduled to expire on December 21, 2002) and relocate to another apartment.
When Poyck later sued to recover unpaid rent arrears, the Bryants countered that no sums were due as a result of the owner's breach of the statutory warranty of habitability and conditions which triggered a constructive eviction. [A "constructive eviction" occurs when a landlord's "wrongful acts" or omissions "substantially and materially deprive the tenant of the beneficial use and enjoyment of the premises...The tenant, however, must abandon possession in order to claim there was a constructive eviction." Barash v. Pennsylvania Terminal Real Estate Corp., 26 N.Y.2d 77 (1970).]
As Judge Hagler observed:
While there appears to be no reported cases dealing with secondhand smoke in the context of implied warranty of habitability, secondhand smoke is just as insidious and invasive as the more common conditions such as noxious odors, smoke odors, chemical fumes, excessive noise, and water leaks and extreme dust penetration. Indeed, the U.S. Surgeon General, the New York State Legislature and the City of New York City Counsel declared that there is a substantial body of scientific research that breathing secondhand smoke poses a significant health hazard .... Therefore, this Court holds as a matter of law that secondhand smoke qualifies as a condition that invokes the protections of RPL section 235-b under the proper circumstances. As such, it is axiomatic that secondhand smoke can be grounds for a constructive eviction. [citations omitted]
Although Poyck claimed he could not be held legally responsible for his neighbors' conduct, the Civil Court found that argument to be "misplaced," noting as follows:
While the landlord contends that he had no control over the neighbors in apartment 5-C, he failed to offer any evidence that he took any action to eliminate or alleviate the hazardous condition. The landlord could have asked the board of managers of the condominium to stop the neighbors from smoking in the hallway and elevator as well as to take preventive care to properly ventilate unit 5-C so that the secondhand smoke did not seep into the Bryants' apartment. Specifically, Real Property Law section 339-v(1)(i) mandates that condominium by-laws restrict the use and maintenance of both the units and common elements such as the hallways and elevators so as to "prevent unreasonable interference with the use of respective units and of the common elements by several unit owners." The board of managers and even the landlord could have commenced an action for damages or injunctive relief for non-compliance with the by-laws and decisions of the board of managers pursuant to the Condominium Act .... Moreover, in the case of "flagrant or repeated violation" by a unit owner, the Condominium Act also authorizes the board of managers to impose sufficient surety to ensure future compliance with their by-laws and decisions. Real Property Law section 339-j.
In fact, for some thirty years, our appellate courts "have continuously held that the implied warranty of habitability can apply to conditions beyond a landlord's control." And this case presented no exception to that rule.
As a result of this decision, apartment dwellers may want to think twice before "lighting up" in the privacy of their own homes. Not only can such conduct subject them to eviction, but there may also be liability for damages arising from any rent (or "maintenance") credits that may issue together with such other compensation that be awarded to neighbors under an array of cognizable legal theories, like negligence or breach or contract.
Unless an appellate court chimes in to the contrary, tobacco users can expect to be smoked out ... to the suburbs.
A few years ago, the Appellate Division, First Department, issued an interesting decision on "time is of the essence" provisions incorporated into landlord-tenant settlement agreements (or "stipulations of settlement"). Responding to a reluctance by lower courts to enforce these agreements as written, the appellate court concluded in 1029 Sixth LLC v. Riniv Corp., that when the document is subject to extensive negotiation and includes terms advantageous to both sides, the agreement must be honored despite any hardship or inconvenience that may be subsequently encountered by a party. As the court observed:
The parties having conditioned the tenants' right to the contemplated payments on the landlord's absolute right to obtain possession of the premises, broom clean, on the vacate date, their failure to so deliver possession undermines the tenants' claims to sympathy or the consideration of equity. Their references to hardworking families do not suffice; nor do claims of fiscal hardship...In a situation completely of their own making, they are the victims of a strict stipulation provision they agreed to in order to obtain the advantage of another provision favorable to themselves.
If the insertion in the stipulation of the provisions requiring strict compliance with the requirement to vacate the premises turned out to be harsh, it was nevertheless an important, negotiated term of the agreement, and as such, must be enforced....
Thus, when an agreement provides "time is of the essence," that language will typically signify that the agreement's performance obligations are steadfast, concrete, and immalleable.
A recent case which further exemplifies this point, is 291 Pleasant Ave., LLC v. Morris, wherein the tenant, Deanna Morris, is reported to have had difficulty honoring the "time of the essence" payment terms of a settlement agreement reached within the context of holdover case. Apparently, Ms. Morris filed "no fewer than six orders to show cause seeking extensions and other relief." Ultimately, a Judge of the Housing Part of the New York County Civil Court denied the tenant additional time within which to make a required payment and authorized an eviction. On appeal, the Appellate Term, First Department, affirmed quoting from Mill Rock Plaza Associates v. Lively, another Appellate Division case:
"Strict enforcement of the parties' settlement stipulation...is warranted based upon the principle that the parties in a civil dispute are free to chart their own litigation course...."
While stipulations are preferred dispute-resolution mechanisms, litigants must tread cautiously for noncompliance with the terms of these agreements can undoubtedly have dire consequences. (Are you willing to stipulate to that?)
Last week, Bianca Jagger--international jet-setter, social activist and former spouse of Rolling Stone, Mick--almost went to jail for not paying her rent. (Apparently, Ms. Jagger gave her landlord "no satisfaction.")
"Doo Doo Doo Doo Doo...."
In an order filed on September 1, 2006, a New York County Supreme Court Justice found Bianca in contempt of court for "willfully disobeying the explicit directives of two prior court orders requiring [Bianca] Jagger to pay rent and/or use and occupancy" to her landlord, Katz Park Avenue Corporation. The court perceived Jagger's conduct as "calculated to...defeat, impair, impede and prejudice [Katz's] rights and remedies."
"Doo Doo Doo Doo Doo...."
In addition to a $500 fine, Jagger was directed to pay $4,614.29--her February 2006 rent--into court and to continue paying that sum while the case is pending, "on the first day of each month, without setoff or deduction."
"Doo Doo Doo Doo Doo...."
The Supreme Court's order just doesn't sit right with us. For some two centuries, the law has been that you can't imprison tenants for not paying their rent. (Think about it. If it had been a remedy readily available to landlords, loads of non-paying tenants would be housed in penal institutions throughout our great state.)
"Doo Doo Doo Doo Doo...."
While a court has the power to punish a party for civil contempt when there is a "non-payment of a sum of money, ordered or adjudged by the court to be paid," that procedure is restricted to "where by law execution can not be awarded for the collection of such sum...." [Judiciary Law section 753(A)(3)]. In other words, if a money judgment will afford an opposing party sufficient relief then--according to established appellate caselaw--"the remedy of contempt is unavailable."*
"Doo Doo Doo Doo Doo...."
Since Bianca is good for the money, we're not quite sure why things went the way they did. But, as the saying goes, it ain't over till the skinny (old) guy sings....
"Hey! You! Get off of my cloud...."
For a copy of the Supreme Court's Order in Jagger v. Katz Park Avenue Corp., please click on the following link: Bianca Jagger
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* See, e.g., 4504 New Utrecht Ave. Corp v. Pita Parlor, Inc., 143 A.D2d 171, 531 N.Y.S.2d 622 (2d Dep't 1988) ("The plaintiffs were entitled...to the alternative relief requested in their motion, which was for a judgment for the use and occupancy arrears."); Takaya v. Syndicom Corp., N.Y.L.J., 6/15/01, p. 20, col. 1 (App.Term, 1st Dep't) ("The remedy of civil contempt was unavailable for tenants' failure to comply with a prior order directing them to pay use and occupancy, since the order was enforceable as a money judgment pursuant to CPLR Article 52....").
In V & J Inc. v. 2320 Rte. 112, LLC, a commercial tenant refused to pay rent claiming that its space had been rendered "unusable," (thus triggering a "constructive eviction"), and that it was not required to honor its lease while not in possession. After the landlord brought a nonpayment case, the court reviewed the parties' respective claims and defenses and awarded the landlord 3 1/2 months of rent arrears, while the tenant received a rent abatement--or forgiveness--of 2 1/2 months ("the entire period that the premises [were] unusable").
When it came time to decide whether or not legal fees should be awarded to the victor, who do you think was perceived as the "prevailing party" in this case? The landlord, who was awarded 60% of the rent claimed to be due, or the tenant, who received a 40% reduction due the conditions that existed?
The Suffolk County District Court determined that the landlord had prevailed and awarded legal fees in the amount of $1,500. On appeal, the Appellate Term, 9th and 10th Judicial Districts, rescinded the award of fees to the landlord and tersely concluded that NEITHER side had prevailed.
Neither a "constructive eviction" nor a 60% recovery of the sums sought made either side a winner. A toss-up?
[Note: A "constructive eviction" occurs when a landlord's "wrongful acts substantially and materially deprive the tenant of the beneficial use and enjoyment of the premises...The tenant, however, must abandon possession in order to claim there was a constructive eviction." Barash v. Pennsylvania Terminal Real Estate Corp., 26 NY2d 77 (1970).]
One of the ways an owner may increase the rent of a regulated unit is by making substantial improvements, repairs, and/or providing additional services. With rent-stabilized units, for example, the Rent Stabilization Code provides, at section 2524.4(a)(1), as follows:
An owner is entitled to a rent increase where there has been a substantial increase...of dwelling space or an increase in the services, or installation of new equipment or improvements, or new furniture or furnishings, provided in or to the new tenants housing accommodation, on written tenant consent to the rent increase. In the case of vacant housing accommodations, tenant consent shall not be required.
The amount of the increase attributable to these "individual apartment improvements" (or IAIs) is limited to 1/40th of the total cost of these improvements and services, including installation but excluding finance charges.
Currently, a landlord is not required to secure the consent of either the New York State Division of Housing and Community Renewal (DHCR) or the incoming tenant (of a vacant unit) prior to implementing the desired modifications or improvements. Nor will any rent increase triggered by those changes be subject to the agency's or incoming tenant's approval. The calculations are submitted to the agency at face value and accepted as true. This latitude does not mean that a landlord may act with wild abandon. If the calculations are challenged within a four year window, the owner will be required to produce the underlying documentary support and could be subject to rent overcharge and treble-damage liability (three times the amount of the overcharge, if found to have acted intentionally or with reckless disregard of the governing methodology).
Not all modifications justify a rent hike. By way of example, ordinary repair and maintenance--like wallpaper removal, plastering, painting, redecorating, and the scraping and coating floors with polyurethane--will not qualify. However, a gut renovation or rehabilitation of a unit likely would. And, even when the improvement is not that extensive or extreme, such as when the increase is attributable to the installation of new appliances, fixtures, and/or flooring, increases based on such upgrades have met with agency approval.
When challenged or requested, an owner must be prepared to produce one or more of the following items: cancelled checks and/or receipts marked paid-in-full, contemporaneously dated or timed with the work's completion; signed contracts (detailing the work performed); and/or an affidavit from the contractor indicating the work performed, attesting to its completion and payment-in-full.
As was demonstrated by the outcome of a recent case, should the DHCR, or a court of competent jurisdiction, find that a landlord is unwilling or unable to substantiate its alleged costs, dire consequences will likely follow. In Graham Court Owners Corp. v Green, the Appellate Term, First Department, affirmed a housing court judge's finding of overcharge and treble-damage liability, noting as follows:
The trial court properly found that landlord failed to submit adequate documentation in support of its claimed improvements in accordance with DHCR Policy Statement 90-10. Nor did landlord produce any witness affiliated with the contractor or otherwise demonstrate the nature and scope of the work performed ... Furthermore, a number of items reflect normal maintenance and repair for which an increase is not authorized ... Finally, treble damages were properly imposed, since landlord failed to establish that its overcharge was not willful.
For a copy of the DHCR's "Fact Sheet #12" - "Rent Adjustments for New Services, New Equipment or Improvements to an Apartment," please click on the following link: http://www.dhcr.state.ny.us/ora/pubs/html/orafac12.htm
For a copy of the DHCR's "Policy Statement 90-10" - "Major Capital Improvements/Individual Apartment Improvements Confirmation of Costs/Payments," please click on the following link: http://www.dhcr.state.ny.us/ora/pubs/html/orap9010.htm
Summary proceedings (whether they be about a tenant's nonpayment of rent or an occupant's "holding over") are frequently riddled with technical objections relating to the notices that preceded the litigation and/or the content of the pleadings. And, in their earnest desire to mete justice, jurists will occasionally rule that these errors or omissions somehow divest the court of "subject matter jurisdiction" and dismiss a case. For the longest time, we have publicly advocated that while a dismissal may be the correct result--such as, when there is an utter failure to comply with a statutory or regulatory requirement or when the error is otherwise prejudicial or violative of law--the characterization of case-related irregularities as "subject matter jurisdiction" defects is just plain inartful.
In our text, Landlord and Tenant Practice in New York, we have noted as follows:
Subject matter jurisdiction, which is constitutionally or statutorily bestowed, relates to the types or categories of actions that a court is empowered to hear and the range of remedies it is authorized to confer...Since litigants lack the power to grant or deprive a court of subject matter jurisdiction, such defects may neither be waived nor conferred by stipulation or other agreement between the parties. When jurisdiction to grant a specific remedy is found to be lacking, that request must be denied and the proceeding may continue, provided that the court is empowered to award the remaining relief sought.
A recent appeal decided by the New York State Court of Appeals will hopefully put any confusion to rest once and for all. Although the decision involved the application of the State's Executive Law, and did not involve a landlord-tenant dispute, the Court's analysis clearly applies to all summary proceedings (which would include nonpayment and holdover cases).
In the Matter of Ballard v. HSBC Bank USA, Diane Ballard initiated a special proceeding in the Supreme Court seeking judicial review of an adverse determination rendered against her by Edward A. Friedland, the Acting Commissioner of the New York State Division of Human Rights. Although Ms. Ballard's Notice of Petition omitted the proceeding's return date, a letter which accompanied her papers indicated that once that date was assigned by the court, all litigants would be notified. While there were some preliminary exchanges about the scheduling (including a request by one of the respondents to adjourn to matter to another date), it appears that none of the parties initially objected to the return-date defect.
Several weeks later, one of the respondents moved to dismiss Ballard's case on the ground of "lack of jurisdiction" and that her claim was "barred by the statute of limitations" based on the notice of petition's return-date omission. Ballard countered the her filing was not defective, but even if had been, it only comprised a waivable "personal jurisdiction" objection. The Supreme Court concluded that the irregularity "implicate[d] subject matter jurisdiction, not jurisdiction of the parties" and transferred the matter to the Appellate Division. On motion practice, the appellate court concurred with the Supreme Court and dismissed Ballard's case. The Court of Appeals reversed, noting as follows:
"The question of subject matter jurisdiction is a question of judicial power: whether the court has the power, conferred by the Constitution or statute, to entertain the case before it"...We have routinely held that technical defects in filings do not fall under the umbrella of subject matter jurisdiction when they do not undermine the constitutional or statutory basis to hear a case....
The Court of Appeals characterized Ballard's error as a "defect on personal jurisdiction grounds" that had been waived by the respondents' participation in the proceeding without "timely" objection and concluded with wise words of caution to all litigants seeking to exploit an adversary's technical error:
As we [have previously] stated..."[the parties] are warned that if they want to capitalize on technicalities they must mind their own procedures"...As respondents failed to timely raise a challenge to personal jurisdiction, that claim was waived and the petition may go forward.
WHAT'S IN A DEMAND OR NOTICE? SHOPRITE HAS THE ANSWER!
Prior to the commencement of a nonpayment proceeding, a landlord is required by statute to make a "demand of the rent," which may be oral or in writing. [Real Property Actions and Proceedings Law section 711(2)] For some thirty years, the law has been pretty well settled that the request need not be "exact" or "precise" in its proffered calculation. Rather, the demand most "fairly" afford the tenant notice of the "approximate good faith sum" alleged by the landlord to be due for the time period in question.
A "notice to cure," on the other hand, is typically the predicate to a holdover proceeding. Most leases permit the landlord to prematurely end (or terminate) the tenancy when the occupant violates a "substantial" lease-related obligation. When this situation arises, a landlord is usually required to afford the tenant an opportunity to correct or "cure" the "default," so that a forfeiture may be avoided. This preliminary notice advises the tenant of the landlord's objections and minimally apprises of: 1) the nature of the violation; 2) the need to effect a correction or cure within a specified time period; and 3) the consequences of the tenant's delay or inaction.
It is rare that we see both types of notices examined by a court in the same case, but that is precisely what occurred in ShopRite Supermarkets, Inc. v. Yonkers Plaza Shopping, LLC. In that dispute, ShopRite challenged the sufficiency of several notices issued by its landlord. The City of Yonkers had issued a violation against the property due to certain structural damage to the center's exterior wall. Apparently, it was the tenant's obligation to fix this problem and the tenant failed or refused to do so. Thus, in the rent demand, the landlord sought to recoup the fees and charges it had incurred to address the violation, "on an interim basis." The notice to cure, on the other hand, sought to compel the tenant to address the violation.
ShopRite commenced an action in the Westchester County Supreme Court seeking to declare the various notices of "no force and effect." The landlord countered with a request for an order directing the tenant to repair the structural violation. The Supreme Court denied the tenant's request and granted the landlord's application for relief. On appeal, the Appellate Division, Second Department, affirmed.
The appellate court's dissection of the various elements of the notices is of particular interest. As to the rent demand, the court observed:
'A proper demand for rent must fairly afford the tenant, at least, actual notice of the alleged amount due and of the period for which such claim is made. At a minimum, the landlord or his agent should clearly inform the tenant of the particular period for which a rent payment is allegedly in default and of the approximate good faith sum of rent assertedly due for each such period'...The [landlord's] rent demand itemized the demolition and scaffolding costs the [landlord] incurred in order to mitigate, on an interim basis, the defects which were the subject of the violation, and indicated the date they were billed. Further, the rent demand notified the [tenant] that it owed the [landlord] the total sum as "additional rent," as defined in the lease. The rent demand provided the [tenant] with a good faith approximation of the amount due and therefore was valid[.]
As to the "notice to cure," the Appellate Division noted as follows:
'The purpose of a notice to cure is to specifically apprise the tenant of claimed defaults in its obligations under the lease and of the forfeiture and termination of the lease if the claimed default is not cured within a set period of time'...The notice to cure advised the [tenant] of the lease provisions at issue and informed the [tenant] that if it failed to cure the subject violation within 30 days, the [landlord] intended to do so and bill the [tenant] for the costs to cure as 'additional rent' under the lease. Attached to the notice to cure was a copy of the violation notice issued by the City of Yonkers, which indicated that there was 'structure damage to the exterior wall around the shopping center.' Therefore, the notice to cure sufficiently apprised the [tenant] of its obligations under the lease, gave a sufficient description of the areas of the building which needed repairs, and specified the consequences if the violation was not cured within a set period of time...Although the [tenant] retained an architectural engineer to review the [landlord's] repair plans, it did not perform the repairs necessary to cure the violation, and did not make any payments to defray the cost of repair work.
ShopRite's advertising once professed that it "does it right." In this particular instance, it looks like the supermarket chain "got it wrong."
Like any other contract, lease or rental agreements are usually supported by the exchange of consideration. By that we mean, in return for a landlord's grant of exclusive possession and control of delineated space (whether it be commercial or residential in nature), a tenant typically agrees to pay a sum of money in monthly installments, commonly known as "rent." In addition to that base charge, leases will typically authorize the landlord's recovery of other fees and charges (like attorneys' fees and late charges).
A "security deposit," on the other hand, is a fund of money (or other consideration) advanced to the owner to ensure the tenant's performance of the terms and conditions of the parties' agreement. These proceeds are viewed by New York law as "trust moneys" which should be maintained in a segregated manner and not "commingled" with the landlord's monies. Most lease agreements typically contain a security-deposit requirement.
As a recent appellate decision demonstrates, since "security deposits" are not "rent," they are not recoverable within a nonpayment case. Attempting to circumvent this prohibition could adversely impact the outcome of a case. By way of example, in Graham Realty Assoc. LLC v. Peller the landlord and tenant entered into a stipulation of settlement which provided for a final judgment of possession and money judgment in the amount of $2,668.75. Since the total inappropriately included a security deposit of $793.75, and a carbon monoxide detector fee of $25, the tenant moved to set aside the agreement. A Housing Court Judge denied the request, but on appeal the Appellate Term, 2nd and 11th Judicial Districts, reversed on the following grounds:
Inasmuch as a security deposit is not "rent"...and, in the context of this rent-stabilized tenancy, the carbon monoxide detector fee cannot be considered "rent"...the court did not have subject matter jurisdiction over these items...and could not include them in the final judgment. Accordingly, tenant's motion to vacate the stipulation and final judgment is granted.
While we have the highest regard for the Appellate Term, we have some qualms with the outcome of this appeal. We particularly take issue with the court's use of the phrase "subject matter jurisdiction" in this particular instance. It is unclear to us how the inclusion of unauthorized charges impacted the court's constitutional and statutory powers to adjudicate the dispute. Since litigants lack the ability to grant or deprive a court of "subject matter jurisdiction," we do not understand how the parties' agreement divested the court of its ability to mete out justice or to resolve the matter in a fair and impartial manner. Additionally, why vacate the agreement in its entirety? Had the remaining charges been paid? Unfortunately, the decision affords little insight as to why a carve-out of the "authorized" charges did not survive appellate muster.
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In Gimelfarb v. Cooperman, landlord, Daniel Perla, and Terrianne Cooperman, an upstairs neighbor, were sued for water damage caused to Yelena Gimelfarb's apartment. 
For a copy the Appellate Term's decision, please use this link: Gimelfarb v. Cooperman
In 
In 
Audrey D faced eviction from her apartment for nonpayment of rent and was apparently unable to find alternate housing due to health and financial challenges.
In 
In 
Because New York is such a "great mosaic," you can expect to encounter people from all walks of life with varying degrees of proficiency with the "mother tongue."
Since nonpayments and holdover cases are designed to be resolved expeditiously, it's never a good thing to allow these disputes to languish.
In 
As we have previously reported, there continues to be a disturbing resistance by our appellate courts to award legal fees to a prevailing party, even when that reimbursement is clearly authorized by the parties' lease agreement.*
In 
Did you catch the Appellate Term's decision in 
If a recipient contests receipt of legal papers alleged to have served on them, you better be prepared to present testimony as to your efforts to effect service, or your case will be dismissed.
Settlement agreements -- or "stipulations" -- reached within the context of litigation are typically viewed as preferred dispute resolution mechanisms, and will not be cast aside absent some significant misunderstanding or irregularity.
In 
Diamonds are reported to be the hardest minerals known to humankind. On the "Mohs' scale of mineral hardness," here's how diamonds rate (with a 10 being the highest rank on the scale):
When a Manhattan fencing center failed to pay its rent, the building's landlord filed a summary nonpayment proceeding to collect the sums due. 
Even when things look pretty bleak for a tenant, and an eviction is imminent, a court retains the power to vacate the warrant and can allow the tenant to remain in possession of commercial or residential space for "good cause shown." [RPAPL section 749(3)]
There are a series of steps a landlord must take before starting a rent nonpayment case.
North Main St. Bagels (NMSB), located out in Easthampton, New York, closed its doors back in October 1997, but didn't surrender its space since it was in the midst of negotiating a sale of the business.
